Assume the Following Information for a Bank Quoting on Spot

question 79

Multiple Choice

Assume the following information for a bank quoting on spot exchange rates: ​
Exchange rate of Singapore dollar in U.S.$
=
$) 32
Exchange rate of pound in U.S.$
=
$1) 50
Exchange rate of pound in Singapore dollars
=
S$4) 50
​
Based on the information given, as you and others perform triangular arbitrage, what should logically happen to the spot exchange rates?

• A) The Singapore dollar value in U.S. dollars should appreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate.
• B) The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should depreciate.
• C) The Singapore dollar value in U.S. dollars should depreciate, the pound value in U.S. dollars should appreciate, and the pound value in Singapore dollars should appreciate.
• D) The Singapore dollar value in U.S. dollars should appreciate, the pound value in U.S. dollars should depreciate, and the pound value in Singapore dollars should appreciate.

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Definitions:

Vicariously Liable

The legal principle where one party is held liable for the actions of another party, such as an employer for the acts of its employees.

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Hot Pursuit

A legal principle that allows law enforcement officers to cross jurisdictional lines in pursuit of a fleeing suspect.

Fourth Amendment

A provision of the U.S. Constitution that protects individuals against unreasonable searches and seizures by the government.