Use the Table for the Question(s)below

question 99

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.Assume that there is a competitive market for McDonald's food items and that McDonald's sells the Big Mac value meal for $4.79.Does an arbitrage opportunity exists and if so how would you exploit it and how much would you make on one value meal?

• A)Yes,buy a value meal and then sell the Big Mac,Coke,and fries to make arbitrage profit of $0.68.
• B)No,no arbitrage opportunity exists.
• C)Yes,buy a Big Mac,Coke,and fries,then sell a value meal to make arbitrage profit of $1.09.
• D)Yes,buy a Big Mac,Coke,and fries,then sell a value meal to make arbitrage profit of $0.68.
• E)Yes,buy a value meal and then sell the Big Mac,Coke,and fries to make arbitrage profit of $1.09.

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