Homework answers / question archive / Assume the following information:                                                                         B Bank          Y Bank       Bid price of New Zealand dollar                  $0

Assume the following information:                                                                         B Bank          Y Bank       Bid price of New Zealand dollar                  $0

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Assume the following information:

 

                                                                      B Bank          Y Bank

      Bid price of New Zealand dollar                  $0.402         $0.398

      Ask price of New Zealand dollar                 $0.403         $0.400

 

Compute the profit from locational arbitrage, if possible, assume you had $1,000,000. Show steps. What market forces would occur to eliminate any further possibilities of locational arbitrage?