What Effect Does the Process of Arbitrage Have on Currency

question 5

Multiple Choice

What effect does the process of arbitrage have on currency markets?

• A)It interferes with the proper functioning of the currency markets.
• B)It creates unnatural demand for currencies that are the subject of arbitrage transactions.
• C)It makes them function properly and is responsible for the rational pricing of currencies.
• D)It does not affect the currency markets because it involves both purchases and sales of the same currency.

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Definitions:

Processes

Encompasses a series of actions, changes, or functions that bring about a result or accomplish an objective.

Developmental Milestones

The developmental sequences and patterns that are predictable in a child’s growth.

Temperament

The way individuals respond to their external and internal environments.

Piaget's Phases

A theory of cognitive development that outlines four stages in a child's intellectual development, formulated by psychologist Jean Piaget.