B) arbitrage is the use of discrepancies in currency exchange rates to transform one unit of a currency into more than one unit of the same currency. for example, suppose that 1 u. s. dollar buys 64 indian rupees, 1 indian rupee buys 1.8 japanese yen, and 1 japanese yen buys 0.009 u. s. dollars. then, by converting currencies, a trader can start with 1 u. s. dollar and buy 64 × 1.8 × 0.009 = 1.0368 u. s. dollars, thus turning a profit of 3.68 percent.