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:

Photosynthesis

The process by which green plants and some other organisms use sunlight to synthesize nutrients from carbon dioxide and water, producing oxygen as a byproduct.

Oxygen

A chemical element with symbol O, essential for cellular respiration in most living organisms and a major component of Earth's atmosphere.

Metabolic Pathways

Sequences of chemical reactions that occur in a cell, transforming substrates into products and energy.

Sunlight

The natural light emitted by the Sun, which is a primary energy source for Earth's climate system and necessary for photosynthesis in plants.