Assume the bid rate of a Singapore dollar is $.40 while the ask rate is $.41 at Bank X. Assume the bid rate of a Singapore dollar is $.42 while the ask rate is $.425 at Bank Z. 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?
A) $11,764.
B) -$11,964.
C) $36,585.
D) $24,390.
E) $18,219.

Question

Quizplus · Accepted Answer

$1,000,000/$.41 = S2,439,024 × $.42 = $1,024,390

Assume the Bid Rate of a Singapore Dollar Is