- CFA Exams
- CFA Level I Exam
- Study Session 12. Equity Investments (1)
- Reading 36. Market Organization and Structure
- Subject 3. Financial Intermediaries
CFA Practice Question
Suppose that the exchange rates (after taking out the fees for making the exchange) in London are £5 = $10 = ¥1000 and the exchange rates in Tokyo are ¥1000 = $12 = £6. Converting ¥1000 to $12 in Tokyo and converting that $12 into ¥1200 in London, for a profit of ¥200, would be ______.
A. securitization
B. arbitrage
C. investing
Explanation: In reality, this "triangle arbitrage" is so simple that it almost never occurs.
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