An Attempt to Profit by Converting Dollars to Yen, Yen

question 48

Multiple Choice

An attempt to profit by converting dollars to yen, yen to euros, and euros back to dollars would be an example of

• A) arbitrage.
• B) speculation.
• C) hedging.
• D) intervention.

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Definitions:

Fair Value

An estimate of the price at which an asset could be bought or sold, or a liability settled, in an orderly transaction between market participants at the measurement date.

Equity Method

An accounting technique used for recording investments in which the investor has significant influence but not total control over the investee.

Deferred Income Tax

An accounting concept that represents the difference between taxes payable and tax expense due to timing differences in recognizing revenues and expenses.

Tax Rate

The rate at which taxes are levied on an individual or a company's income.