A trader who simultaneously bought Swiss francs in New York for .9772 and sold them in Zurich for .9774 would be practicing

Question

Quizplus · Accepted Answer

The trader is taking advantage of a price discrepancy between two markets by buying low in one market and selling high in another, which is the definition of simple arbitrage. Inside trading refers to using insider information to make trades, compound arbitrage involves utilizing multiple markets and instruments to make a profit, and parity exploitation involves trading based on the theory of purchasing power parity.

A Trader Who Simultaneously Bought Swiss Francs in New York