The following information refers to Fresno Bank and Champaign Bank.
Based on this information, locational arbitrage would be profitable.

Question

The following information refers to Fresno Bank and Champaign Bank.
  Based on this information, locational arbitrage would be profitable.

Quizplus · Accepted Answer

Locational arbitrage refers to the process of taking advantage of price differences between two or more markets by buying low in one market and selling high in another market. Based on the information provided in the data, Fresno Bank is quoting a bid price of 0.7894 for the euro, while Champaign Bank is quoting an ask price of 0.7900 for the same currency. This represents a price difference of 0.0006, which could be exploited through locational arbitrage. By buying euros from Fresno Bank and selling them to Champaign Bank, a trader could make a profit of 0.0006 per euro.

The Following Information Refers to Fresno Bank and Champaign Bank