Lextire 1

Question 1

What is arbitrage?

Answer 1

When you can position to profit from market disequilibrium

Question 2

What is speculation?

Answer 2

To profit from an expectation

Question 3

What is difference between direct and indirect quotes?

Answer 3

A direct quote is domestic currency per unit of foreign currency. E.g. one yen is worth one US penny.
An indirect quote is units of foreign currency per unit of domestic currency. E.g yen per dollar.

Question 4

What is bid ask spread?

Answer 4

Allow traders to profit by buying currency at a low bid price and selling currency at a higher ask price. Then show an example.