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Purchasing a foreign currency overseas at a low price and reselling it in the US market at a higher price is dubbed: A) Moral Hazard B) Leveraging C) Credit Default Swap D) Currency Arbitrage

Respuesta :

Purchasing a foreign currency overseas at a low price and reselling it in the US market at a higher price is dubbed Currency Arbitrage . Correct option (d).

What Is Currency Arbitrage?

Currency arbitrage is a forex trading method in which a trader makes use of the various spreads provided by brokers for a certain currency pair. For a given currency pair, varying spreads indicate discrepancies between the ask and bid prices. In order to profit from the mispriced rates, currency arbitrage includes buying and selling currency pairs from several brokers.

  • Currency arbitrage is the exploitation of differences in quotes offered by brokers.
  • Currency arbitrage can be practiced using different strategies, such as two-currency arbitrage and three-currency arbitrages.

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