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If the Dollar/franc Exchange Rate Is 1 Franc = $1

question 72

True/False

If the dollar/franc exchange rate is 1 franc = $1.20 in New York and 1 franc = 1.22 in Zurich,arbitragers would find it profitable to purchase francs in Zurich and immediately resell them in New York.


Definitions:

Price Range

The spread between the highest and lowest price of a commodity, security, or asset over a given period.

Demand

The desire and ability of consumers to purchase goods and services at given prices.

Perfectly Elastic

Describes a situation in economics where the demand or supply for a product can vary infinitely with a small change in price.

Inelastic

A situation in which the demand for a product does not increase or decrease correspondingly with a fall or rise in its price.

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