ANSWER: Locational arbitrage can occur when the spot rate of a given currency varies among locations. ... If a disparity does exist, locational arbitrage is possible; as it occurs, the spot rates among locations should become realigned.

How do you do locational arbitrage?

To employ the locational arbitrage strategy, all you need to do is buy the GBP from bank ABC for 1.45 USD and immediately sell the GBP to bank XYZ for 1.47 USD. This way, you can make a profit of 0.02 USD for this trade. One of the advantages of this trade is that it is virtually risk-free.

In which case will locational arbitrage most likely be feasible?

In which case will locational arbitrage most likely be feasible? One bank's bid price for a currency is greater than another bank's ask price for the currency.