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Locational arbitrage; restructuring of operations

1) Assume the bid rate of a Swiss franc is $.57 while the ask rate is $.579 at Bank X. Assume the bid rate of the Swiss franc is $.560 while the ask rate is $.566 at Bank Y. Given this information, what would be your gain if you use $1,000,000 and execute locational arbitrage? That is, how much will you end up with over and above the $1,000,000 you started with?
$7,067.
$8,556.
$10,114.
$12,238.

2) Any restructuring of operations that _______ the difference between a foreign currency's inflows and outflows may _______ economic exposure.
reduces; increase
increases; reduce
reduces; reduce
A and B
none of the above

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1) Assume the bid rate of a Swiss franc is $.57 while the ask rate is $.579 at Bank X. Assume the bid rate of the Swiss franc is $.560 while the ask rate is $.566 at Bank Y. Given this information, what would be your gain if you use $1,000,000 and execute locational arbitrage? That is, how much will you end up with over and above the ...

Solution Summary

Answers to multiple choice questions on locational arbitrage, restructuring of operations.

$2.19