If a Kilogram of Coal Costs €1

question 87

Multiple Choice

If a kilogram of coal costs €1.5 in Germany and $1 in the United States, the law of one price ________.

• A) calculates the expected exchange rate between the euro and the dollar to be €1.5/$
• B) calculates the expected exchange rate between the euro and the dollar to be €.67/$
• C) tells us the expected exchange rate between the euro and dollar is equal to the actual rate
• D) tells us there is an arbitrage opportunity

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Definitions:

Standard Deduction

A fixed dollar amount that reduces the income on which you're taxed, varying by filing status, and claimed by those not itemizing deductions.

AMT Adjustments

Modifications required under the Alternative Minimum Tax rules to calculate certain items of income and deductions differently than for regular tax purposes.

Tax Preferences

Certain types of income or deductions that receive preferential tax treatment, affecting the calculation of alternative minimum tax (AMT).

Passive Activities

Economic engagements, such as rental activities or businesses in which the taxpayer does not actively participate, often with specific tax rules.