Assume that the yen/dollar exchange rate quoted in Tokyo at 5 p. m. is ¥120 = $1, and the New York yen/dollar exchange rate at the same time (noon New York time) is ¥123 = $1. What action should a broker take to yield immediate profit?

The yen/dollar exchange rate quoted in Tokyo at 5 p. m. is ¥120 = $1, and the New York yen/dollar exchange rate at the same time (noon New York time) is ¥123 = $1. The action taken by a broker take to yield immediate profit is Arbitrage

Explanation:

The broker in New York market firstly uses dollars to purchase yen and then at the same time he sells the yen to buy dollars in Tokyo market, thus making a profit this phenomenon is referred to as Arbitrage

The term Arbitrage is used to demonstrate a practice in which a broker takes advantage of the price difference in two or more market by making a deal through which he can capitalize upon the imbalance created in the two markets. The profit of the same is the difference in the prices of the two currencies that are traded

So we can say that in case where,

The yen/dollar exchange rate quoted in Tokyo at 5 p. m. is ¥120 = $1, and the New York yen/dollar exchange rate at the same time (noon New York time) is ¥123 = $1. The action taken by a broker take to yield immediate profit is Arbitrage