Which of the Following Is an Example of Arbitrage

question 75

Multiple Choice

Which of the following is an example of arbitrage?

• A)An inventor of a new hydrocarbon cracking technology based on palladium buys this metal knowing that its price will rise when the technology is adopted.
• B)A metals merchant is offered $108,000 in one year for $100,000 of palladium today,when the interest rate is 10%.
• C)An investor,seeing that the price of palladium on the metals exchange in two different countries is slightly different,buys on one and sells on the other to make a profit.
• D)A firm buys $250,000 of palladium today,with an option to sell it at $275,000 in one year if interest rates rise above 10%.
• E)An investor buys palladium today hoping the price will increase and it can be sold for a profit.

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Definitions:

Shoes

Footwear items designed to protect and comfort the human foot while the wearer is doing various activities.

Exchange Rate

The conversion rate from one currency to another.

Imports

Merchandise or services entering a nation from a foreign country, intended for sale or application.

Exports

Exports refer to goods or services sent from one country to another for sale or trade, contributing to a nation's gross domestic product.