Due to ____, Market Forces Should Realign the Cross Exchange

question 85

Multiple Choice

Due to ____, market forces should realign the cross exchange rate between two foreign currencies based on the spot exchange rates of the two currencies against the U.S. dollar.

• A) forward realignment arbitrage
• B) triangular arbitrage
• C) covered interest arbitrage
• D) locational arbitrage

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Definitions:

Trade Restrictions

Regulations or policies that governments impose to control the amount and types of goods and services that can be imported or exported, affecting international trade.

United States and Mexico

are neighboring countries in North America, sharing a long border and involved in significant trade, diplomatic, and cultural exchanges.

Dumping

The practice of exporting goods at prices lower than the home market prices, often considered unfair trade and subjected to penalties.

Producing Country

A nation that is engaged in the extraction or creation of goods and services for sale.