FER & Determination
3 important questions on FER & Determination
What is the difference between indirect intervention and Capital Controls? In what situations would a government apply capital controls?
1. Indirect Intervention: is when a government tries to influence the flow of money in and out of the country by changing things like interest rates, taxes, or other economic policies that affect how investors move their money
Capital Controls: on the other hand, are when the government directly limits or restricts how people or companies can exchange their currency for foreign money or move money in and out of the country.
Capital Controls: on the other hand, are when the government directly limits or restricts how people or companies can exchange their currency for foreign money or move money in and out of the country.
Explain the concept of foreign exchange intermarket arbitrage. Why can this be considered an opportunity for "risk-free" profits?
Making money by buying currency at a lower price in one market and selling them at higher price in another market
is when traders take advantage of differences in currency prices between different markets. For example, a currency might be cheaper in one market than another, so a trader can buy it in the cheaper market and sell it in the more expensive one, making a profit.
IF Intermarket arbitrage is possible, show how you would use your initial amount of CHF to gain profits from arbitrage (end your answer stating how many CHF you end up with)
CHF to euro 964.50
euro to CAD 1404.601
cad to CHF 1009.415
euro to CAD 1404.601
cad to CHF 1009.415
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