Through arbitrage a direct currency quote is always equal to the reciprocal of the forward quote.

Question

Quizplus · Accepted Answer

Arbitrage involves exploiting the price differences of identical or similar financial instruments on different markets or in different forms. A direct currency quote being always equal to the reciprocal of the forward quote is not a condition for arbitrage, nor is it always true due to market fluctuations, interest rates differences, and other factors affecting currency values.

Through Arbitrage a Direct Currency Quote Is Always Equal to the Reciprocal