Use the Table for the Question(s)below

question 52

Multiple Choice

Use the table for the question(s) below.
Consider the following prices from a McDonald's Restaurant:
-A McDonald's Big Mac Extra Value Meal® consists of a Big Mac Sandwich,Large Coke,and a Large Fry.Assuming that there is a competitive market for McDonald's food items,at what price must a Big Mac value meal sell to ensure the absence of an arbitrage opportunity and uphold the law of one price?

• A)$4.08
• B)$4.38
• C)$5.47
• D)$5.77

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Definitions:

Opportunity Loss Strategy

An approach in decision making that focuses on minimizing the potential loss for not choosing the best alternative.

Scoring Model

A statistical tool or algorithm that assesses and assigns scores to individuals or entities based on various attributes or behavior patterns to predict future outcomes.

Attributes

Characteristics or qualities that define or differentiate objects, individuals, or data points.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used as a tool in investment and financial analysis.