Bank a Asks

question 13

Multiple Choice

Bank A asks $.555 for Swiss francs and Banks B and C are willing to pay $.557 for francs. An institution could capitalize on these differences by engaging in

• A)covered interest arbitrage.
• B)triangular arbitrage.
• C)locational arbitrage.
• D)witching hour arbitrage.

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Definitions:

Caitlin's Producer Surplus

The difference between what a producer (in this case, Caitlin) actually receives for selling a good and the minimum they would be willing to accept.

Producer Surplus

The difference between what producers are willing to accept for a good or service and what they actually receive, measured by the area above the supply curve and below the market price.

Whitewater Rafting

A recreational outdoor activity which uses an inflatable raft to navigate through rough or whitewater rivers.

Producer Surplus

The difference between the amount a producer is willing to accept for a good or service and the actual amount received from selling it at the market price.