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