Assume locational arbitrage is possible and involves two different banks. The realignment that would occur due to market forces would increase one bank's ask rate and would decrease the other bank's bid rate.

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Locational arbitrage involves taking advantage of price differences between different locations. If one bank is offering a higher bid rate and another bank is offering a lower ask rate, an arbitrage opportunity exists. This would cause market forces to realign, increasing the bank's ask rate and decreasing the other bank's bid rate to eliminate the price discrepancy.

Assume Locational Arbitrage Is Possible and Involves Two Different Banks