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3. Locational Arbitrage Assume the following exchange rate quotes on British pounds: BID ASK $1.47 Orleans Bank Kansas Bank $1.48 1.48 1.49 Explain how locational

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3. Locational Arbitrage Assume the following exchange rate quotes on British pounds: BID ASK $1.47 Orleans Bank Kansas Bank $1.48 1.48 1.49 Explain how locational arbitrage would occur. Also explain why this arbitrage will realign the exchange rates. Bank Price Buy British pound at which bank for what price? Sell British pound to which bank for what price? Which bank's price will go higher? Which bank's price will go lower

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