A True Consignment

question 50

Multiple Choice

A true consignment

• A) involves an immediate transfer of title between the consignor and consignee.
• B) is a type of lease.
• C) is a type of security interest.
• D) is a situation in which ownership is held by the consignee until the item is sold.
• E) none of the above.

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Definitions:

Arbitrage Opportunity

A situation where a trader can profit from price differences of the same asset in different markets, buying low in one and selling high in another.

Exchange Rates

The worth of a single currency when converted into another, indicating the comparative value between two currencies.

Profit

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes associated with the activity.

Covered Interest Arbitrage

A strategy that involves converting currency through the spot exchange market, investing in foreign interest bearing securities, and hedging exchange risk through the forward market to earn riskless profit.