If the Cross Exchange Rate of Two Noneuro Currencies Implied

question 20

True/False

If the cross exchange rate of two noneuro currencies implied by their individual spot rates with respect to the euro is less than the cross exchange rate quoted by a bank, locational arbitrage is possible.

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Definitions:

Conditioned Response

A learned reaction to a conditioned stimulus that occurs because of previous conditioning, an essential concept in classical conditioning theories.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any prior learning.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally triggers a response without the need for prior learning.

Conditioned Response

A learned reaction to a previously neutral stimulus, achieved through repeated association with an unconditioned stimulus.