Assume That the Yen/dollar Exchange Rate Quoted in London at 3:00

question 7

Multiple Choice

Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is ¥115 = $1. Rinaldo finds out that the rate quoted in New York at 10:00 a.m. (3:00 p.m. London time) is ¥135 = $1. Rinaldo decides to buy yen in New York and sell it in London. Rinaldo is engaging in

• A) currency swapping.
• B) currency speculation.
• C) carry trade.
• D) arbitrage.
• E) hedging.

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Definitions:

Sodium Chloride

A chemical compound known as table salt, widely used in food seasoning and preservation, consisting of sodium and chloride ions.

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A sudden and severe exposure to a toxic substance causing harmful effects.

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A photography technique that combines two or more exposures into a single image to produce surrealistic effects.