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

question 67

Multiple Choice

In the London market,Rolls-Royce stock closed at £0.875 per share.On the same day,the British Pound sterling to the U.S.dollar spot exchange rate was £0.6366/$1.00.Rolls Royce trades as an ADR in the OTC market in the United States.Five underlying Rolls-Royce shares are packaged into one ADR.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

• A)$0.00.
• B)$1.12.
• C)$2.12.
• D)$3.12.

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Definitions:

Winning Point

The final score or action that clinches victory in a game or competition.

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The capacity or likelihood of a product, event, or person to attract media attention or public interest.

Recognizability

The quality or state of being easily identifiable or recognizable based on specific characteristics.

Simon Cowell

A British music and television executive known for his critical commentary as a judge on talent shows like "American Idol," "The X Factor," and "Britain's Got Talent."