Suppose $1 = 1.5 euros in London and $1 = 1.2 euros in New York. Which of the following would be the right trade for you to make money?

Question

Quizplus · Accepted Answer

Selling dollars in London and buying dollars in New York is the right trade. In London, 1 dollar gets you 1.5 euros, and in New York, you need only 1.2 euros to get 1 dollar. So, by converting dollars to euros in London and then converting those euros back to dollars in New York, you make a profit.