Why do investors engage in arbitrage?
What will be an ideal response?
Investors engage in arbitrage because there is an opportunity for profit. These profit opportunities occur when two assets that are essentially identical have two different rates of return. Investors arbitrage by selling the asset that earns a lower rate of return and purchasing the asset that earns the higher rate of return to take advantage of the profit differential.
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An open market operation occurs when ________ buys or sells securities ________
A) the Federal Reserve System; from or to the federal government B) the Federal Reserve System; in the open market C) a commercial bank; from or to the federal government D) a commercial bank; from or to the public
Which statement is true?
A. On the production possibilities frontier, 85 percent of capital is employed. B. If we moved closer to the origin and further away from the production possibilities frontier, unemployment would increase. C. To have economic growth, we must push the production possibilities frontier outward. D. All of the statements are true.
Describe the differences between the demand curve and the supply curve for the Mexican peso in the foreign exchange market, and explain the reasons for their particular slopes.
What will be an ideal response?
Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.YearUnits of OutputPrice Per Unit18$22103315441855206If year 2 is the base year, the real GDP for year 3 is:
A. $45. B. $60. C. $40. D. $30.