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Bank A Bank B Bid USD/AUD 1.433 1.431 Ask USD/AUD 1.434 1.432 Using 50,000 AUD, what is the profit you could generate from locational arbitrage?

Bank A Bank B

Bid USD/AUD 1.433 1.431

Ask USD/AUD 1.434 1.432

  1. Using 50,000 AUD, what is the profit you could generate from locational arbitrage? Show all steps (3 p)
  2. How would arbitrage disappear? Explain (2 p.)

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