Bank a Quotes a Bid Rate of $0

question 2

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:

Income Taxes Payable

The amount of income tax a company owes to the government but has not yet paid, reflected as a liability on the balance sheet.

Operating Activities

are the day-to-day functions of a business that involve the production, sales, and delivery of a company's products and services.

Net Cash

The difference between a company's total cash inflows and outflows within a given period.

Investing Activities

Transactions related to the acquisition or disposal of long-term assets and investments, used to assess a company's growth projects and capital expenditure.