Which of the Following Is an Example of Arbitrage

question 75

Multiple Choice

Which of the following is an example of arbitrage?

• A)An inventor of a new hydrocarbon cracking technology based on palladium buys this metal knowing that its price will rise when the technology is adopted.
• B)A metals merchant is offered $108,000 in one year for $100,000 of palladium today,when the interest rate is 10%.
• C)An investor,seeing that the price of palladium on the metals exchange in two different countries is slightly different,buys on one and sells on the other to make a profit.
• D)A firm buys $250,000 of palladium today,with an option to sell it at $275,000 in one year if interest rates rise above 10%.
• E)An investor buys palladium today hoping the price will increase and it can be sold for a profit.

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Definitions:

Pro-Social Behaviour

Actions intended to benefit others or society as a whole.

Halo Effect

A cognitive bias where the perception of one positive quality in a person or thing influences the perception of other, unrelated qualities.

Cohesive

Characterized by unity; sticking together as a group or material.

Interdependent

The quality or condition of being mutually reliant on each other; a relationship in which the members are dependent on one another for support or success.