The Exchange Rates in New York for $1 Are C$1

question 8

Multiple Choice

The exchange rates in New York for $1 are C$1.2381 and £0.6789. In Toronto, C$1 will buy £0.5487. How much profit can you earn on $10,000 using triangle arbitrage?

• A) $6.56
• B) $6.88
• C) $6.97
• D) $7.03
• E) $7.11

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Definitions:

Trading Partners

Countries, organizations, or individuals that engage in the exchange of goods, services, or information.

Joint Output

Products or services that are produced together in the course of a single production process, often resulting in a correlation between their quantities or prices.

Comparative Advantage

The ability of a country or entity to produce a good or service at a lower opportunity cost than others.

Opportunity Costs

The decline of potential rewards from different options as a result of choosing one.