The Actions of the Arbitrageurs in the Foreign Exchange Markets

question 141

Multiple Choice

The actions of the arbitrageurs in the foreign exchange markets:

• A)destabilize foreign exchange markets.
• B)are highly risky.
• C)have no effect on exchange rates.
• D)help ensure that exchange rates are equalized across all markets.
• E)are the same as those undertaken by speculators.

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Definitions:

Loan

Money that is loaned and needs to be paid back, including interest.

Compounded Semi-annually

Interest calculation method where interest is added to the principal amount twice a year, leading to the interest being compounded for the second term.

Goal

An intended outcome or target that an individual or organization aims to achieve.

Compounded Semi-annually

The process of adding interest to the principal sum of a loan or deposit twice a year, also accounting for the interest accumulated over the period.