Assume You Can Exchange $1 for Either £1

question 29

Multiple Choice

Assume you can exchange $1 for either £1.0 or €0.50 in the U.S.In the London market,you can exchange £1 for €0.52.This situation creates an opportunity to profit immediately from which one of the following?

• A)Futures arbitrage
• B)Currency hedge
• C)Interest rate swap
• D)Absolute purchasing power parity
• E)Triangle arbitrage

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Definitions:

Incremental Sales Revenue

Additional revenue generated from sales activity above a previously established base level.

Incremental Marketing Effort

Marketing activities that are added gradually to test their effectiveness or to build upon the existing strategy.

SWOT Analysis

A strategic planning tool used to identify and analyze the Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning.

Planning Phase

The initial stage in project management or business strategy formulation where objectives are set, and procedures to achieve them are outlined.