A Trader at a U

question 53

Multiple Choice

A trader at a U.S.bank believes that the euro will strengthen substantially in exchange rate value during the next hour.Thus,she buys large amount of euro now and wait for the value of the euro to rise so that she can sell it later.This action is called:

• A) arbitrage, because it is a risk-free activity.
• B) arbitrage, because it is a risky activity.
• C) speculation, because it is a risk-free activity.
• D) speculation, because it is a risky activity.

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Definitions:

Data Without Analysis

Information collected for reference or analysis that has not yet been examined or interpreted.

Firsthand Experience

Direct personal observation or involvement in events, providing immediate or primary evidence.

Observation

The action or process of closely monitoring or noticing something or someone, often for study, research, or assessment.

Oppose Your Recommendation

Challenging or arguing against a suggested course of action or advice given.