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Assume the following information: Beal Bank Yardley Bank Bid price of New Zealand dollar $.402 $.397 Ask price of New Zealand dollar $.403 $.398 Given

Assume the following information:

Beal Bank Yardley Bank

Bid price of New Zealand dollar $.402 $.397

Ask price of New Zealand dollar $.403 $.398

Given this information, is locational arbitrage possible? If so, explain the steps involved in locational arbitrage, and compute the profit from this arbitrage if you had $1,000,000 to use. What market forces would occur to eliminate any further possibilities of locational arbitrage?

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