Explain the Steps Necessary to Take Advantage of an Arbitrage

question 3

Essay

Explain the steps necessary to take advantage of an arbitrage opportunity,which may exist between the dollar and yen,when a future yen payment is required.

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Definitions:

Current Profitability

The measure of a company's current profit levels, often assessed through metrics like net income or operating profit.

Variable Costs

Expenses that vary directly with the amount of output or sales.

Fixed Manufacturing Overhead

Regular, unchanged costs incurred during the manufacturing process, regardless of production volume, such as salaries of permanent staff and rent.

Financial Advantage

The benefit gained in monetary terms from a certain business activity or financial decision.