The potential for risk-less or arbitrage profit exists

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Which following statement is INCORRECT?

When the market is not in equilibrium, the potential for “risk-less” or arbitrage profit exists.

The theories about how exchange rate always work out to be “true” when compared to what students and practitioners observe in the real world.

A forward exchange agreement between currencies states the rate of exchange at which a foreign currency will be bought forward or sold forward at a specific date in the future

RPPP holds that PPP is not particularly helpful in determining what the spot rate is today, but that the relative change in prices between two countries over a period of time determines the change in the exchange rate over that period.

While hedging can protect the owner of an asset from a loss, it also eliminates any gain from an increase in the value of the asset hedged against.

Reference no: EM131556927

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