Suppose the Exchange Rate Is Such That 1 U

question 137

Multiple Choice

Suppose the exchange rate is such that 1 U.S.dollar equals 1 euro in New York and 0.9 euros in Paris.An arbitrageur would sell euros:

• A)in New York and buy U.S.dollars in Paris.
• B)in both Paris and New York at different prices.
• C)in New York while buying them in Paris.
• D)in Paris while buying them in New York.
• E)at the same price in both cities.

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