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In the London Market, Rolls Royce Stock Closed at £0

question 3

Multiple Choice

In the London market, Rolls Royce stock closed at £0.875 per share on Thursday, April 17, 2003. Rolls Royce trades as an ADR in the OTC in the United States. Five underlying Rolls Royce shares are packaged into one ADR. On April, 17, 2003, the British Pound sterling to the U.S. spot exchange rate was £0.6366/$1.00.
-If the Rolls Royce ADRs were trading at $5.75 when the underlying shares were trading in London at £0.875,ignoring transaction costs,the arbitrage trading profit would be:

Definitions:

SWOT Analysis

A tool for strategic planning that helps in identifying the Strengths, Weaknesses, Opportunities, and Threats associated with competition in business or planning of projects.

Constant Reminder

A persistent cue or notification designed to keep a particular idea, goal, or task at the forefront of one’s attention.

Strengths

Refers to the internal attributes and resources that support a successful outcome.

Organizing

The process of arranging or structuring resources and tasks to achieve a specific goal or objective.