Which of the Following Is an Example of Triangular Arbitrage

question 42

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 $0.55) that has quoted the South African rand (ZAR)/Singapore dollar (S$) exchange rate at ZAR2.50 when the spot rate for the South African rand is $0.20.
• C) Buying Singapore dollars from a bank (quoted at $0.55) that has quoted the South African rand/Singapore dollar exchange rate at ZAR3.00 when the spot rate for the South African rand is $0.20.
• D) Converting funds to a foreign currency and investing the funds overseas.

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Definitions:

Institutional Incentive

Motivations or rewards structured within organizations or systems, encouraging particular patterns of behavior among their participants or members.

Virginia Plan

A suggestion from delegates from Virginia for a two-chambered legislative body during the creation of the United States Constitution in 1787.

National Government

Refers to the organization through which political authority is exercised at the national level, encompassing all branches and levels of governance.

Veto

The power of a president or governor to reject a bill proposed by a legislature, effectively preventing it from becoming law without further legislative action.