If Quoted Exchange Rates Are the Same Across Different Locations

question 87

Multiple Choice

If quoted exchange rates are the same across different locations, then ____ is not feasible.

• A) triangular arbitrage
• B) covered interest arbitrage
• C) locational arbitrage
• D) A and C

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Definitions:

Price Volatile

Referring to how quickly and to what extent the price of a commodity or asset can change within a short period of time.

Elastic

Describes a situation in economics where the demand or supply of a good or service is sensitive to changes in price.

Necessity

An indispensable requirement or need for something; often something that is essential for survival or to carry out a specific task.

Luxury Good

A product or service that is considered to be of high quality and high price, often seen as a status symbol.