Assume That You Can Buy 250 Canadian Dollars with 100

question 2

Multiple Choice

Assume that you can buy 250 Canadian dollars with 100 British pounds.Which one of the following statements is correct given the following exchange rates? Assume that you start out with British pounds.
$\begin{array}{|l|l|l|}\hline\text { Country } & \text { U.S. } \$ \text { Equivalent } & \text { Currency per U.S. \$ } \\\hline \text { Canada }&? & 1.3500\\\hline\end{array}$

• A)You can earn a profit of C$2.47 by using triangle arbitrage.
• B)You can earn a profit of £1.17 by using triangle arbitrage.
• C)You can earn a profit of C$1.17 by using triangle arbitrage.
• D)You can earn a profit of £2.47 by using triangle arbitrage.
• E)You can not earn a profit given the current exchange rates.

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Definitions:

Preexisting Duty

An obligation that a party is already legally required to perform, which cannot serve as the basis for new consideration in a contract.

Sump Pump

A device used to remove accumulated water from a sump basin, commonly found in the basements of homes.

Moral Obligation

A duty or commitment that is not legally enforceable but is based on ethical or moral considerations.

Preexisting Duty Rule

A legal principle that an existing obligation or duty cannot serve as consideration for a new contract.