The Euro/dollar Exchange Rate Is €1 = $1

question 115

Multiple Choice

The euro/dollar exchange rate is €1 = $1.20.If a trader buys a camera that retails for $300 in New York and sells it for €200 in Berlin (ignoring transaction costs,transportation costs,or trade barriers) ,this represents a potential profit (arbitrage) of _____.

• A) $60
• B) $80
• C) $20
• D) $100
• E) $40

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Definitions:

Multinational

A corporation that operates and has assets in more than one country, often managing production or delivering services in various international markets.

Domestic

Pertains to something that is within, originates from, or is related specifically to a country's internal affairs.

Global

Pertaining to or involving the entire world, often in context of business operations, concerns, or impacts that are worldwide in scope.

Culture Shock

A feeling of confusion, doubt, or nervousness caused by being exposed to an unfamiliar culture or environment.