If the exchange rate in New York for British pounds sterling is quoted at 1 pound = $1.60, and in London the rate is quoted at 1 pound = $1.62, financial arbitragers might

Question

Quizplus · Accepted Answer

Financial arbitragers would take advantage of the difference in exchange rates between New York and London by simultaneously buying pounds in New York (at a lower rate of $1.60 per pound) and selling dollars in London (at a higher rate of $1.62 per pound). This would result in a profit of $0.02 per pound.

If the Exchange Rate in New York for British Pounds