Use the Table for the Question(s) Below

question 15

Multiple Choice

Use the table for the question(s) below.
Consider the following prices from a McDonald's Restaurant:

-A McDonald's Big Mac value meal consists of a Big Mac Sandwich,Large Coke,and a Large Fry.Assuming that there is a competitive market for McDonald's food items,at what price must a Big Mac value meal sell to insure the absence of an arbitrage opportunity and uphold the law of one price?

• A) $4.08
• B) $4.38
• C) $5.47
• D) $5.77

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Definitions:

Comparative Period

A reference period against which financial or operational performance is compared, typically the previous year or quarter.

Declaration

An official announcement or formal statement, often used in the context of declaring dividends to be paid to shareholders.

Cash Dividend

A Cash Dividend is a payment made by a company out of its earnings to investors in the form of cash.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues.