Assume the U

question 87

Multiple Choice

Assume the U.S. dollar spot exchange rate with the Canadian dollar is $1 = CA$1.125. The U.S. dollar and Swiss Franc exchange rate is $1 = 1.235. If the cross rate between the franc and Canadian dollar is 1 franc = CA$0.9820, then show that an arbitrage is possible. What positions should be taken to profit from the mispricing?

• A) Start with U.S. dollars, buy francs and convert them to Canadian dollars, then convert back to U.S. dollars.
• B) Start with francs, buy U.S. dollars and convert them to Canadian dollars, then convert back to francs.
• C) Start with Canadian dollars, buy francs and convert to U.S. dollars, then convert back to Canadian dollars.
• D) Start with U.S. dollars, buy Canadian dollars and convert to francs, then convert back to U.S. dollars.

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Definitions:

Mitochondria

Organelles within cells that produce energy through the process of cellular respiration, often referred to as the powerhouses of the cell.

Matrix

A matrix refers to the intercellular substance or material, often comprising proteins and fluids, in which cells or particles are embedded in tissue or culture media.

Cytoplasm

The jelly-like substance within a cell that surrounds the nucleus and organelles, providing a medium for biochemical reactions.

ATP Synthase Complex

An enzyme complex that synthesizes ATP from ADP and inorganic phosphate during cellular respiration and photosynthesis.