If the exchange rates, after fees, in Tokyo are ¥1 000 = €6 = $9 and the exchange rates in Paris are €1 = $1.5 = ¥171, which of the following would you expect to occur?
A)a surge in conversion of euros to yen in Paris
B)a surge in conversion of dollars to yen in Tokyo
C)a surge in conversion of euros to dollars in Paris
D)a surge in conversion of euros to yen in Tokyo

Question

Quizplus · Accepted Answer

The exchange rate in Paris allows you to get more yen for euros than in Tokyo, creating an arbitrage opportunity.

If the Exchange Rates, After Fees, in Tokyo Are ¥1