Will an Arbitrageur Facing the Following Prices Be Able to Make

question 15

Multiple Choice

Will an arbitrageur facing the following prices be able to make money?

• A)Yes, borrow $1,000 at 5%; Trade for € at the ask spot rate $1.01 = €1.00; Invest €990.10 at 5.5%; Hedge this with a forward contract on €1,044.55 at $0.99 = €1.00; Receive $1.034.11.
• B)Yes, borrow €1,000 at 6%; Trade for $ at the bid spot rate $1.00 = €1.00; Invest $1,000 at 4.5%; Hedge this with a forward contract on €1,045 at $1.00 = €1.00.
• C)No; the transactions costs are too high.
• D)None of the above

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Definitions:

Contaminated Sharps

Medical tools such as needles or scalpel blades that have come into contact with potentially infectious materials.

Biohazardous Waste Container

A container designed specifically for collecting and disposing of materials that are contaminated with biological agents that could pose a health risk.

Dispose

To get rid of or throw away something that is no longer useful or desirable.

Aseptic Procedure

Techniques used during medical and surgical procedures designed to prevent microbial contamination, maintaining a sterile environment.