Assume the Following Bid and Ask Rates of the Pound

question 29

Multiple Choice

Assume the following bid and ask rates of the pound for two banks as shown below:
As locational arbitrage occurs:
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• A)the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will increase.
• B)the bid rate for pounds at Bank C will increase; the ask rate for pounds at Bank D will decrease.
• C)the bid rate for pounds at Bank C will decrease; the ask rate for pounds at Bank D will decrease.
• D)the bid rate for pounds at Bank C will decrease; the ask rate for pounds at Bank D will increase.

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Definitions:

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Psychoanalytic Perspective

A theory of psychology that emphasizes unconscious psychological processes and contends that childhood experiences significantly affect adult personality.

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