When Exchange Rates Are Not in Alignment, Traders See Opportunities

question 48

Multiple Choice

When exchange rates are not in alignment, traders see opportunities for _____, which move the rates _____ equilibrium.

• A) speculation; away from
• B) arbitrage; toward
• C) investments; away from
• D) liquidation; toward

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Definitions:

Activity Base

An activity base is a measure used in managerial accounting to allocate costs, based on activities that drive costs, as part of activity-based costing (ABC).

Service Departments

Departments within a company that support the primary operations but don't directly generate revenue.

Profit Margin

A financial metric used to assess a company's profitability by comparing net income to sales; calculated as (Net Income / Sales) * 100.

Income From Operations

The earnings generated from a company’s core business activities, excluding any gains or losses from investments and other non-operational sources.