Which of the following is an example of interest arbitrage?
A)investing in debt instruments in different currencies or different countries
B)selling U.S. dollars for Swiss francs, then selling Swiss francs for British pounds, then selling British pounds for U.S. dollars
C)investigating different commercial banks to find the best exchange rate
D)an American investing in a London-based company

Question

Quizplus · Accepted Answer

Interest arbitrage involves taking advantage of differences in interest rates between countries or currencies. Investing in debt instruments in different currencies or countries allows for the potential to earn higher returns through interest rate differentials. The other options do not involve interest rate differentials.

Which of the Following Is an Example of Interest Arbitrage