Arbitrageurs Are Said to Look for Riskless Profits By

question 101

Multiple Choice

Arbitrageurs are said to look for riskless profits by:

• A) contracting in the forward exchange markets.
• B) buying at the spot rate and selling at the forward rate.
• C) buying in one market and selling in another to take advantage of different prices for the same good.
• D) buying short-term bonds and converting them to long-term bonds.

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Definitions:

Good Faith

Acting with honesty and without the intention to defraud or to seek an unfair advantage.

Without Alteration

A term referring to maintaining the original state or condition of something without any changes or modifications.

Lack of Consideration

A legal concept indicating the absence of a necessary element in a contract, where one party does not provide a promised payment or service in exchange for the other's offering.

Failure of Consideration

A situation where the promised performance or payment in a contract is not fulfilled, leading to potential contract invalidation.