Which of the Following Best Describes Arbitrage

question 33

Multiple Choice

Which of the following best describes arbitrage?

• A)using foreign exchange to fund new foreign direct investments
• B)purchasing foreign currency in anticipation of long-term trends
• C)using foreign-exchange instruments to speculate for profit
• D)purchasing foreign currency on one market for immediate resale on another market

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Definitions:

Equipment

Tangible assets used in the operation or production process of a business, such as machinery, computers, and tools.

Interest Rate

The percentage of a loan that is applied as interest for the borrower, usually shown as an annual rate.

Account

A record summarizing all the transactions pertaining to a particular item in the financial statements.

Annual Rate

The interest rate stated on a yearly basis, often used in the context of savings accounts, loans, or investments to represent the yearly cost or return.