When the cross rate for currencies offered by two banks differs from the exchange rate offered by a third bank, a triangular arbitrage opportunity exists.

Question

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Triangular arbitrage involves taking advantage of differences in exchange rates between three different currencies, using exchanges rates offered by different banks. When the exchange rates offered by two banks for a currency pair differ from the exchange rate offered by a third bank, a triangular arbitrage opportunity exists.

When the Cross Rate for Currencies Offered by Two Banks