Suppose $1 = 1

question 77

Multiple Choice

Suppose $1 = 1.5 euros in London and $1 = 1.2 euros in New York. Which of the following would be the right trade for you to make money?

• A) You sell 1,000 euros in London and buy euros in New York.
• B) You sell dollars in New York and buy dollars in London.
• C) You sell dollars in London and buy dollars in New York.
• D) You sell euros in London and buy dollars in New York.

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Definitions:

Capitalized Loss

A loss from an investment or asset that is added to the cost basis of another asset, rather than being immediately expensed.

Long-Term Investments-AFS

Available-for-sale long-term investments are those not classified as held-to-maturity or trading securities, and are reported at fair market value.

Short-Term Investments-AFS

Assets that are readily marketable and intended to be converted into cash within a short period, typically a year, classified as "Available for Sale."

Notes Payable

Short or long-term liabilities representing amounts the company owes on written promises to pay specified sums of money at future dates.