Which of the Following Is an Example of Triangular Arbitrage

question 3

Multiple Choice

Which of the following is an example of triangular arbitrage initiation?

• A) buying a currency at one bank's ask and selling at another bank's bid, which is higher than the former bank's ask.
• B) buying Singapore dollars from a bank (quoted at $.55) that has quoted the South African rand (SAR)/Singapore dollar (S$) exchange rate at SAR2.50 when the spot rate for the rand is $.20.
• C) buying Singapore dollars from a bank (quoted at $.55) that has quoted the South African rand/Singapore dollar exchange rate at SAR3.00 when the spot rate for the rand is $.20.
• D) converting funds to a foreign currency and investing the funds overseas.

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Definitions:

Behavioral Approaches

Psychological methods focusing on understanding and changing human behavior through reinforcement, punishment, and observational learning.

Systems Theories

A holistic approach to analysis that focuses on the way that a system's constituent parts interrelate and how systems work over time within the context of larger systems.

Cognitive Approaches

Psychological theories focusing on how people process information, think, learn, and remember, influencing behavior and emotional responses.

Biological Models

These are frameworks used to explain behaviors and mental states through biological factors, such as genetic, neurological, and physiological processes.