# 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

https://brainmass.com/business/international-finance/locational-arbitrage-restructuring-of-operations-41129

#### Solution Preview

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.