Spot quotes for canadian dollars and pounds

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Reference no: EM131526523

Suppose you observe the following spot quotes for Canadian dollars and pounds. What is the maximum profit you could earn (in terms of Canadian dollars) via locational arbitrage if you have C$6,000,000 at your disposal? Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols or words when entering your answer.

Bank X: C$1.1122-30

Bank Y: £.8895-99

Which of the following will occur to prevent the arbitrage profits you found in the previous question?

The ask quote in terms of Canadian dollars will decrease at Bank X.

The bid quote in terms of Canadian dollars will decrease at Bank Y.

The bid quote in terms of Canadian dollars will increase at Bank Y.

No changes are necessary since locational arbitrage is not possible.

Reference no: EM131526523

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