Arbitrage with Two Currencies Is NOT Possible When

question 54

Multiple Choice

Arbitrage with two currencies is NOT possible when:

• A) there is an exchange rate difference in two markets.
• B) traders are familiar with markets.
• C) the exchange rates are in equilibrium, and the same is occurring in all markets.
• D) the exchange rates are extremely volatile.

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Definitions:

Investors

People or organizations that invest funds anticipating financial profits in return.

Current Cost

The cost that would be incurred to replace an asset or inventory at present prices, differing from historical cost which is based on the value at the time of acquisition.

FASB

The Financial Accounting Standards Board, responsible for establishing and improving financial accounting and reporting standards for the public interest.

Financial Statements

Papers that offer a summary of a corporation's fiscal health, comprising the balance sheet, income statement, and cash flow statement.