Scenario: Sam Dearing, Budding International Financier

question 13

Multiple Choice

Scenario: Sam Dearing, Budding International Financier
Sam Dearing is a summer intern in the arbitrage department at a prestigious Wall Street firm. Sam is hoping to be offered a full-time position at the firm after he graduates from college, and therefore, Sam knows that he must demonstrate a strong understanding of how exchange rates work.
-Sam's mentor at the firm told him that the ________ stipulates that an identical product must have an identical price in all countries when the price is expressed in a common currency.

• A) exchange price
• B) law of one price
• C) fixed exchange-rate system
• D) floating exchange-rate system

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Definitions:

Lichen

A symbiotic organism comprised of a fungus and an alga or cyanobacterium, living together on rocks and trees.

Batrachochytrium Dendrobatidis

A pathogenic fungus causing chytridiomycosis, which has been linked to dramatic declines in amphibian populations worldwide.

Chytrid

A type of fungus belonging to the phylum Chytridiomycota, notable for being parasitic or pathogenic in some aquatic species.

Parasite

A living entity that resides within or on a host organism, deriving its nourishment to the detriment of the host.