Which of the following statements is true of speculators?

Question

Quizplus · Accepted Answer

Speculators engage in high-risk activity by betting on changes in exchange rates in hopes of making a profit. They buy and sell currencies in the hope of selling them later at a higher exchange rate. Their actions can affect exchange rates in the short term, and they are different from arbitrageurs who seek to take advantage of price discrepancies in different markets to make a risk-free profit. Option A is incorrect because there is always a risk involved in speculative activity. Option B is incorrect because they cannot simultaneously buy and sell the same currency in different markets. Option D is incorrect because speculators can have a short-term impact on exchange rates.

Which of the Following Statements Is True of Speculators