Answer:
$41,667
Explanation:
First and foremost, in order to profit from the arbitrage opportunity, we need to first of all convert dollars to euro using the exchange rate below
$1.60 = €1.00
$1,000,000 in euros= $1,000,000*€1.00/$1.60=€625,000
Next we convert the euros to pounds using the rate quoted by the bank below:
£1.00 = €1.20
€625,000 in pounds=€625,000*£1.00/€1.20=£ 520,833.33
Lastly, we convert the pounds sterling back to dollars using the below exchange rate
$2.00 = £1.00
£ 520,833.33 in dollars=£ 520,833.33*$2/£1.00=$ 1,041,666.67
Profit from the arbitrage=$ 1,041,666.67 -$1,000,000.00
Profit from the arbitrage=$41,667(rounded to a whole dollar amount)
