26. Assume the following bid and ask rates of the pound for two banks as shown below Bid 51.62 $1.59 Ask Bank C Bank D $1.61 As locational arbitrage occurs: a. the bid rate for pounds at Bank C will increase, the ask rate for pounds at Bank D will increase. b. the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will decrease the bid rate for decrease. the bid rate for pounds at Bank C will decrcase; the ask rate for pounds at Bank D will e. pounds at Bank C will decrease; the ask rate for pounds at Bank D will d. True/False: Use Upper ease only. Write T for true and F for the false statement. (1 point each) Indicate whether the statement is true or false 1. A balance-of-trade surplus indicates an excess of imports over exports 2. A weakening of the U.S. dollar with respect to the British pound would likel reduce the U.S. exports to Britain and increase U.S. imports from Britain over time. 3. The primary component of the capital account is the balance of trade 4. A put option is the amount or percentage by which the existing spot rate exceeds the forward rate. 5. A futures contract is a contract specifying a standard volume of a particular currency to be exchanged on a specific settlement date 6. Relatively high Japanese inflation may result in an increase in the supply of yen for sale and a reduction in t demand for yen, other things being equal. 7. Country X frequently engages in trade flows with the U.S. (such as imports and exports). Country Y the exchange rate of Country Y's currency frequently engages in financial flows with the U.S. (such as financial investments). Everything else held constant, an increase in U.S. interest rates would affect the exchange rate of Country X's currency more 8. If the forward rate for a currency is less than the spot rate for that currency, the forward rate is said to a premium