Use the Following Information to Answer Questions 24-25

question 35

Multiple Choice

Use the following information to answer questions 24-25.
Assume that the following exchange rates exist for the U.S. dollar, Japanese Yen and the British Pound.

-If you are an arbitrageur that starts with $1,000 in New York,

• A) You will buy pound in New York, because pound is cheaper in New York.
• B) You will buy yen in New York, because pound is more expensive in New York.
• C) You will buy both pound and yen in New York to spread the risk.
• D) There is no arbitrage opportunity in this case.

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Definitions:

FASB

The Financial Accounting Standards Board, an organization that establishes financial accounting and reporting standards in the United States.

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The field of accounting focused on the summary, analysis, and reporting of financial transactions pertaining to a business, leading to the creation of financial statements.

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The process of selecting the best course of action from available alternatives based on specific objectives and constraints.

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Individuals or entities outside a company who use the company’s financial information for decision-making purposes.