If the exchange rate is $0.012 per yen in New York and $0.019 per yen in Tokyo,an arbitrage trade could profit by buying yen in Tokyo and simultaneously selling them in New York.

Question

Quizplus · Accepted Answer

The arbitrage opportunity would actually involve buying yen in New York where the price per yen is lower ($0.012) and selling them in Tokyo where the price per yen is higher ($0.019), not the other way around.

If the Exchange Rate Is $0