Assume the Following Information for a Bank Quoting on Spot

question 97

Multiple Choice

Assume the following information for a bank quoting on spot exchange rates:
$$\begin{array} { l l r } \text { Exchange rate of Singapore dollar in U.S. } \$ & = & \$ .32 \\\text { Exchange rate of pound in U.S. } \$ & = & \$ 1.50 \\\text { Exchange rate of pound in Singapore dollars } & = & \text { S } \$ 4.50\end{array}$$
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:

Public Sector

The part of the economy that is controlled by the government, including various government departments and agencies.

Hierarchical

Relating to the classification or arrangement of individuals or entities based on rank, order, or authority within a structure.

Public Sector Bargaining

The negotiation process between government employers and unions representing public sector employees to settle terms of employment.

Federal Level

Pertains to the national government level, as opposed to state or local levels, often in reference to laws, regulations, or administrative agencies.