How Does Arbitrage Differ from Speculation

question 87

Multiple Choice

How does arbitrage differ from speculation?

• A)Speculation, unlike arbitrage, is never used to protect against risk.
• B)A speculator buys or sells foreign currency with the hope that that currency will either weaken or strengthen in the future, resulting in a profit.
• C)Speculation is the purchase of foreign currency on one market for the immediate resale on another market.
• D)Arbitrage is another way to speculate for profit or protect against risk.

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Definitions:

Budget

An estimate of income and expenditure for a set period of time, often used as a plan for financial operations.

Activity Base

A measure used for allocating costs to cost objects, typically related to the level of activity or volume of goods produced that incurs costs.

Advertising Campaigns

A series of advertisement messages that share a single idea and theme which make up an integrated marketing communication (IMC).

Sales

The total amount of goods or services sold by a company within a specific period, indicating the company's operational performance.