Bank a Quotes a Bid Rate of $0

question 6

Multiple Choice

Bank A quotes a bid rate of $0.300 and an ask rate of $0.305 for the Malaysian ringgit (MYR) . Bank B quotes a bid rate of $0.306 and an ask rate of $0.310 for the ringgit. What will be the profit for an investor that has $500,000 available to conduct locational arbitrage?

• A) $2,041,667
• B) $9,804
• C) $500
• D) $1,639

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Definitions:

Scatterplots

Graphical representations where two variables are plotted along two axes, revealing any relationships or patterns between them.

Variables

Elements, features, or factors that are liable to vary or change, often measured, controlled, or manipulated in experiments.

Residual

In statistics, a residual is the difference between the observed value and the value predicted by a model.

Multiple Linear Regression

An extension of linear regression that models the relationship between a dependent variable and two or more independent variables.