Assume That the Yen/dollar Exchange Rate Quoted in London at 3

question 3

Multiple Choice

Assume that the yen/dollar exchange rate quoted in London at 3 p.m.is ×120 = $1,and the New York yen/dollar exchange rate at the same time (10 a.m.New York time) is ×123 = $1.Which of the following transactions would yield immediate profit?

• A)forward exchange
• B)carry trade
• C)currency swap
• D)arbitrage
• E)currency speculation

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Definitions:

Sales Forecasts

Predictions of the future sales performance of a company, typically based on historical data, market trends, and economic conditions.

Participative Budgeting

A budgeting process where employees at all levels are involved in the development of the budget, enhancing its acceptance and usefulness.

Zero-based Budgeting

A budgeting method that starts from a "zero base" every period, requiring all expenses to be justified for each new period, as opposed to being carried forward.

Top-Down Budgeting

A budgeting approach where the budget is created by top-level management and then distributed to lower levels for implementation.