Which of the following best describes arbitrage?
A)using foreign exchange to fund new foreign direct investments
B)purchasing foreign currency in anticipation of long-term trends
C)using foreign-exchange instruments to speculate for profit
D)purchasing foreign currency on one market for immediate resale on another market

Question

Quizplus · Accepted Answer

Arbitrage is the practice of buying an asset on one market and immediately selling it on another market in order to profit from a price discrepancy. In the case of foreign exchange, this would involve purchasing a currency on one market where it is undervalued and then quickly reselling it on another market where it is overvalued.

Which of the Following Best Describes Arbitrage