Author Question: How does arbitrage differ from speculation? A) Speculation, unlike arbitrage, is never used to ... (Read 51 times)

javeds · **on:** Jul 7, 2018

How does arbitrage differ from speculation?

A) Speculation, unlike arbitrage, is never used to protect against risk.
B) A speculator buys or sells foreign currency with the hope that that currency will either weaken or strengthen in the future, resulting in a profit.
C) Speculation is the purchase of foreign currency on one market for the immediate resale on another market.
D) Arbitrage is another way to speculate for profit or protect against risk.

Question 2

Which of the following is LEAST relevant to being designated by Euromoney magazine as a top foreign-exchange dealer?

A) capability of handling specific currencies
B) capability of assessing cultural risk
C) capability of handling derivatives
D) capability of engaging in analytics

Question 3

An investor sells Japanese yen which is yielding a low interest rate and uses the proceeds to buy Swiss francs that yield a higher interest rate. Which term best describes the investor's actions?

A) forward discount spread
B) interbank transaction
C) strike price option
D) carry trade

Gabe · **Reply #1 on:** Jul 7, 2018

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