Bank a Quotes a Bid Rate of £0

question 35

Multiple Choice

Bank A quotes a bid rate of £0.125 and an ask rate of £0.155 for the Malaysian ringgit (MYR) . Bank B quotes a bid rate of £0.162 and an ask rate of £0.171 for the ringgit. What will be the profit for an investor who has £500,000 available to conduct locational arbitrage?

• A) £184,000
• B) £22,581
• C) £148,000
• D) £31,639

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Definitions:

Return on Assets (ROA)

A profitability ratio calculated by dividing net income by total assets, indicating how efficiently a company is using its assets to generate profit.

Percentage of Sales Approach

A method for forecasting financial needs based on the proportion of sales expected in the future.

Projected Dividends

Estimates of the dividends that a company expects to pay out to its shareholders in the future.

Firm's Capacity

The maximum output or the total amount of goods or services that a company can produce under normal working conditions.