What Is the Maximum Net Profit to a Speculator with $1

question 59

Multiple Choice

What is the maximum net profit to a speculator with $1 million if interest rates on 1-year Treasuries are 6% in France,4% in the United States and the exchange rate is expected to change from today's rate of 2Fr/$ to 2.1Fr/$ in 1 year?

• A) $1,060,000
• B) $1,005,683
• C) $1,040,000
• D) $1,050,000
• E) $1,009,524

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Definitions:

Mere Exposure Effect

The tendency among humans to prefer things that are familiar to them is a notable psychological behavior.

Reciprocity Norm

A social norm that dictates that we should treat others as they treat us, fostering mutual aid and cooperation.

Ethnic Groups

Communities or populations sharing common cultural traits, ancestry, language, history, and often a shared sense of identity.

Nationalities

are the distinct ethnic, cultural, or national identities that people belong to, often associated with being a citizen of a particular nation.