Question: (a) Explain Locational Arbitrage. (2 marks) (b) Based on the below Bid and Ask spread for GBP/MYR, exchange MYR30,000 to GBP. Bid Ask 5.4157 5.4223

(a) Explain Locational Arbitrage. (2 marks) (b) Based on the below Bid and Ask spread for GBP/MYR, exchange MYR30,000 to GBP. Bid Ask 5.4157 5.4223 (4 marks) (c) Given the following exchange rates in London and New York: Currencies pair Rate The Exchange EUR/USD 1.2000 London EUR/CAD 1.5400 London USD/CAD 1.2539 New York i. Determine any arbitrage opportunity. (4 marks) ii. Calculate the profit/ (loss) from the above triangular arbitrage assuming your investment starts with USD500,000. (8 marks) iii. Conclude from your answer in (ii) above. (2 marks)

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