If the Quoted Cross-Exchange Rate Between Two Foreign Currencies Is

question 4

True/False

If the quoted cross-exchange rate between two foreign currencies is not aligned with the two corresponding exchange rates, investors can profit from triangular arbitrage.

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Definitions:

At-risk Amount

The maximum value taxpayers are at risk of losing in an investment, affecting the deductible loss limit in tax declarations.

Ordinary Loss

A loss derived from normal business operations or transactions that is not classified as a capital loss.

Passive Activity

Passive activity involves business or trade activities in which the person is not actively involved, affecting how losses and income are treated for tax purposes.

Suspended Losses

Losses that cannot be deducted in the current year and must be carried forward to future years for deduction under certain tax rules.