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Assume the following bid and ask rates of the pound GBP / US$ for two banks as shown below: Bid Ask Bank A $1.41 $1.42
Assume the following bid and ask rates of the pound GBP / US$ for two banks as shown below: Bid Ask Bank A $1.41 $1.42 Bank B $1.39 $1.40 As arbitrage occurs: A) the bid rate for GBP at Bank A will increase; the ask rate for GBP at Bank B will increase B) the bid rate for GBP at Bank A will increase; the ask rate for GBP at Bank B will decrease C) the bid rate for GBP at Bank A will decrease; the ask rate for GBP at Bank B will decrease D) the bid rate for GBP at Bank A will decrease; the ask rate for GBP at Bank B will increase.
Assume the following bid and ask rates of the pound GBP / US$ for two banks as shown below:
Bid Ask
Bank A $1.41 $1.42
Bank B $1.39 $1.40
As arbitrage occurs:
A) the bid rate for GBP at Bank A will increase; the ask rate for GBP at Bank B will increase
B) the bid rate for GBP at Bank A will increase; the ask rate for GBP at Bank B will decrease
C) the bid rate for GBP at Bank A will decrease; the ask rate for GBP at Bank B will decrease
D) the bid rate for GBP at Bank A will decrease; the ask rate for GBP at Bank B will increase.
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Derivative Pricing
Authors: Ambrose Lo
1st Edition
0367734214, 978-0367734213
