Triangle Arbitrage: I

question 9

Multiple Choice

Triangle arbitrage: I. is a profitable situation involving three separate currency exchange transactions.
II) helps keep the currency market in equilibrium.
III) opportunities can exist in either the spot or the forward market.
IV) only involves currencies other than the U.S. dollar.

• A) I and IV only
• B) II and III only
• C) I, II, and III only
• D) II, III, and IV only
• E) I, II, III, and IV

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Definitions:

Yield Curve Spread

The difference in yields between two different debt instruments, often used to gauge economic expectations.

T-Bond Yield

The annual return investors earn on U.S. Treasury bonds, which is a benchmark for long-term interest rates.

Federal Funds Rate

The interest rate at which banks lend reserve balances to other banks overnight, determined by the Federal Reserve.

Top-Down Analysis

An investment strategy that starts with macroeconomic analysis to identify promising sectors or industries before selecting specific stocks.