Question: Cruso has identified three arbitrage opportunities as profitable and would like to know which one of them is the most profitable. Thus, he has asked

Cruso has identified three arbitrage opportunities as profitable and would like to know which one of them is the most profitable. Thus, he has asked you, Putnam's financial analyst, to prepare an analysis of the arbitrage opportunities he has identified. This would allow Cruso to assess the profitability of arbitrage opportunities very quickly. 1. The first arbitrage opportunity relates to locational arbitrage. Cruso has obtained spot rate quotations from two banks in Thailand: Minzu Bank and Sobat Bank, both located in Bangkok. The bid and ask prices of Thai baht for each bank are displayed in the table below. Banks Minzu Bank Sobat Bank Ask Quote $.0232 $.0234 Bid Quote $.0231 $.0233 Determine whether the foreign exchange quotations are appropriate. If they are not appropriate, determine the profit you could generate by withdrawing $100,000 from Putnam's checking account and engaging in arbitrage before the rates are adjusted. Discuss the impact of locational arbitrage on the exchange rates in the market

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