Assume You Discovered an Opportunity for Locational Arbitrage Involving Two

question 30

Multiple Choice

Assume you discovered an opportunity for locational arbitrage involving two banks and have taken advantage of it. Because of your and other arbitrageurs' actions, the following adjustments must take place.

• A) One bank's ask price will rise and the other bank's bid price will fall.
• B) One bank's ask price will fall and the other bank's bid price will rise.
• C) One bank's bid/ask spread will widen and the other bank's bid/ask spread will fall.
• D) A and C

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Definitions:

Connective

This term refers to connective tissue, one of the four major types of tissue in the body, responsible for supporting, connecting, or separating different types of tissues and organs.

Contract

A legally binding agreement between two or more parties that is enforceable by law.

Muscle

A tissue composed of fibers capable of contracting to produce movement in the body.

Colectomy

A surgical procedure to remove all or part of the colon, which may be necessary for the treatment of various conditions, including cancer.