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:<math>S_{a/b}</math> is the quoted market cross exchange rate for b in terms of currency ''a''
:<math>S_{b/\$}</math> is the quoted market cross exchange rate for dollars in terms of currency ''b''
If the market cross exchange rate quoted by a bank is equal to the implicit cross exchange rate as implied from the exchange rates of other currencies, then a no-arbitrage condition is sustained.<ref name="Feenstra & Taylor 2008" /> However, if an inequality exists between the market cross exchange rate, <math>S_{a/\$}</math>, and the implicit cross exchange rate, <math>S_{a/b} S_{b/\$}</math>, then there exists an opportunity for arbitrage profits on the difference between the two exchange rates.<ref name="Madura 2007" />
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