Consider the Following: If the Market Futures Price Is

question 31

Multiple Choice

Consider the following: If the market futures price is 1.69 A$/$, how could you arbitrage

• A)Borrow Australian dollars in Australia, convert them to dollars, lend the proceeds in the United States, and enter futures positions to purchase Australian dollars at the current futures price.
• B)Borrow U.S.dollars in the United States, convert them to Australian dollars, lend the proceeds in Australia, and enter futures positions to sell Australian dollars at the current futures price.
• C)Borrow U.S.dollars in the United States and invest them in the U.S.and enter futures positions to purchase Australian dollars at the current futures price.
• D)Borrow Australian dollars in Australia and invest them there, then convert back to U.S.dollars at the spot price.
• E)There is no arbitrage opportunity.

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Definitions:

Lactate Fermentation

An anaerobic metabolic process by which glucose or other six-carbon sugars are converted into cellular energy and the metabolite lactate.

Aerobic Respiration

The metabolic process in which cells convert glucose and oxygen into energy, carbon dioxide, and water.

Oxygen Molecules

Diatomic molecules consisting of two oxygen atoms bonded together, essential for the process of cellular respiration.

Electron Transport Chain

A series of complexes that transfer electrons from electron donors to electron acceptors via redox reactions, and couples this electron transfer with the transfer of protons (H+ ions) across a membrane.