Suppose You Observe the Following Exchange Rates: €1 =

question 14

Multiple Choice

Suppose you observe the following exchange rates: €1 = $.85; £1 = $1.60; and €2.00 = £1.00.Starting with $1,000,000,how can you make money?

• A)Exchange $1m for £625,000 at £1 = $1.60.Buy €1,250,000 at €2 = £1.00; trade for $1,062,500 at €1 = $.85.
• B)Start with dollars,exchange for euros at €1 = $.85; exchange for pounds at €2.00 = £1.00; exchange for dollars at £1 = $1.60.
• C)Start with euros; exchange for pounds; exchange for dollars; exchange for euros.
• D)No arbitrage profit is possible.

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Definitions:

Nonverbal Communication

The process of conveying a message without the use of words, which can include facial expressions, body language, gestures, eye contact, and more.

Paralanguage

The non-verbal elements of communication used to convey emotion and modify meaning, such as tone of voice, loudness, and pitch.

Aggrandizing

The act of increasing in size, power, or status.

Proxemics

The study of human use of space and the effects that population density has on behaviour, communication, and social interaction.