Assume the following exchange rate quotes on British pounds: Explain how locational arbitrage would occur. Also explain

Question:

Assume the following quotes on British pounds:

Ask Bid $1.46 Orleans Bank Kansas Bank $1.47 1.48 1.49

Explain how locational arbitrage would occur. Also explain why this arbitrage will realign the exchange rates.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...