Reading 12, currency exchange

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Nanman

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CFA L2 curriculum, page 484 - 485
Question 4 from page 484.
Implied JPY/CAD interbank rate: 85,76 bid ; 85,80 ask
Dealer offered JPY/CAD rate: 85,74 bid ; 85,81 ask
Why is answere C incorrect? ”Its possible to make arbitrage profits buying CAD from the dealer and selling it in the interbank market” ? The correct answere given is that no arbitrage profits are possible.
Why can we not buy CAD from the dealer (using JPY @ 85,74 “down-the-bid”) and sell in the interbank market CAD @ 85,80 “up-the-ask” ?
I would appreciate some help in understanding this seemingly simple topic.
Many thanks!
 
I wrote an article on exchange rates (and triangular arbitrage) that may be of some help here: http://financialexamhelp123.com/triangular-arbitrage/.
The simple answer is that if you’re multiplying, you use the smaller number, and if you’re dividing, you use the larger number: either way, you end up with the smaller amount of the new currency.
 
I’m sorry, I have already read Magician’s article and Schweser material, but I can’t get all this about “multiply” and “divide”: what and where?
Could you please clarify.
 
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