Assume the bid rate of a New Zealand dollar is $0.37 while the ask rate is $0.375 at Bank X. Assume the bid rate of the New Zealand dollar is $0.34 while the ask rate is $0.345 at Bank Y. Given this information, what would be your gain if you use $490,000 and execute locational arbitrage? That is, how much will you end up with over and above the $490,000 you started with?

Assume the following bid and ask rates of the pound for two banks as shown below:  BidAskBank A$1.39$1.40Bank B$1.41$1.42As locational arbitrage occurs:

Trading costs have steadily declined since the 1980s thanks to online trading platforms such as Schwab, Fidelity, and Robinhood. This reduction in trading costs has _____________ investor activity in foreign exchange markets which has had made central bank intervention ___________ effective.

Train Stations Inc. is a U.S. firm that has a subsidiary in Hong Kong that produces platforms and sells them to Japan, denominated in Japanese yen. Its subsidiary pays all of its expenses, including the cost of goods sold, in U.S. dollars. The Hong Kong dollar is pegged to the U.S. dollar. If the Japanese yen depreciates against the U.S. dollar, the Hong Kong subsidiary’s revenue will ____, and its expenses will ____.

Patrick Bank quotes the following for the British pound and the New Zealand dollar:   Quoted Bid Price Quoted Ask Price Value of a British pound (£) in $ $1.21 $1.22 Value of a New Zealand dollar (NZ$) in $ $0.65 $0.66 Value of a British pound in     New Zealand dollars NZ$1.97 NZ$1.98 Compute the cross rate of British pounds in New Zealand dollars. The British pound currently buys _______________ New Zealand dollars in the open market. To exploit this mispricing, an investor would need to _____________________.

An MNC is exposed to the Taiwan dollar (TWD) and the Egyptian pound (EGP); 45 percent of the MNC’s funds are Taiwan dollars and 55 percent are pounds. The standard deviation of exchange movements is 6 percent for Taiwan dollars and 7 percent for pounds. The correlation coefficient between movements in the value of the Taiwan dollar and the pound is 0.65. Based on this information, the standard deviation of this two-currency portfolio is approximately:

To strengthen the U.S. dollar, the Fed should ________________________. A strong U.S. dollar tends to _________________ the U.S. economy.

Patrick Bank quotes the following for the British pound and the New Zealand dollar: Quoted Bid PriceQuoted Ask PriceValue of a British pound (£) in $$1.33$1.34Value of a New Zealand dollar (NZ$) in $$0.66$0.67Value of a British pound in  New Zealand dollarsNZ$1.93NZ$1.94Compute the cross rate of British pounds in New Zealand dollars. In this case, the British pound is currently ____________ with respect to the New Zealand dollar. Assuming an investor does not have British pounds or New Zealand dollars, the first thing the investor would need to do to execute triangular arbitrage in this situation is ________________.

If a foreign county experiences a hyperinflation its currency will ______ against most other currencies as there will be a decrease in the ______________ for that currency.

National Bank quotes the following for the British pound and the New Zealand dollar: Quoted Bid PriceQuoted Ask PriceValue of a British pound (£) in $$1.51$1.52Value of a New Zealand dollar (NZ$) in $$0.53$0.54Value of a British pound in  New Zealand dollarsNZ$2.74NZ$2.75Assume you have $52,800 to conduct triangular arbitrage. What is your profit from implementing this strategy?