Realignment in the exchange rates of banks will eliminate locational arbitrage. More specifically, market forces will increase the ask rate of the bank from which the currency was bought to conduct locational arbitrage and will decrease the bid rate of the bank to which the currency was sold to conduct locational arbitrage.

Question

Quizplus · Accepted Answer

This statement is true. Realignment in exchange rates can cause market forces to adjust the ask and bid rates of banks involved in locational arbitrage, resulting in the elimination of opportunities for profit through this practice.

Realignment in the Exchange Rates of Banks Will Eliminate Locational