________ Is Profitable Whenever the Cost of Buying a Currency

question 34

Multiple Choice

________ is profitable whenever the cost of buying a currency directly differs from the cross rate of exchange.

• A) Two-point arbitrage
• B) Three-point arbitrage
• C) Covered interest
• D) Arbitrage of goods

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Definitions:

Perpetuity

A type of annuity that pays a fixed amount of money to an individual indefinitely, without a termination date.

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, including any fees or additional costs associated with the transaction.

Effective Annual Rate

The annual rate of interest that accounts for compounding over the year, providing a true reflection of the financial product's yield.

Rate of Return

The net gain or loss on an investment over a specified time period, expressed as a percentage of the investment's initial cost.