If the exchange rate is $0.01 per yen in New York and $0.015 per yen in Tokyo, then an arbitrager could profit by buying yen in Tokyo and simultaneously sell them in New York.

Question

Quizplus · Accepted Answer

An arbitrager would profit by buying yen where it is cheaper and selling where it is more expensive. In this case, yen is cheaper in New York ($0.01) than in Tokyo ($0.015), so the arbitrager should buy in New York and sell in Tokyo.

If the Exchange Rate Is $0