Question: 5. Given the information below, is there an arbitrage opportunity? If there is an arbitrage opportunity, what assumptions are being made? Table 16.6: Bid ask

5. Given the information below, is there an arbitrage opportunity? If there is an arbitrage opportunity, what assumptions are being made?

Table 16.6: Bid ask rates offered by three banks

Bid ASK

Bank A (GBP/USD) 1.60 1.61

Bank B (MYR/USD) 0.2 0.202

Bank C (GBP/MYR) 8.10 8.20

6. In 1994, the Chinese government considered a policy of requiring all firms to deposit foreign currencies with commercial banks. In turn, these banks were required to remit these funds (once above a certain level) to the People's Republic Bank of China in exchange for Chinese Yuan. What could the implications on the firms, banks, and national economy of such a policy be?

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