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Suppose the Price of Gold in New York Is $1750

question 24

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Suppose the price of gold in New York is $1750 per ounce,while the price of gold in London is $1760.If there are transaction costs of 0.5% when buying or selling in either market,what is the net effect of buying one ounce of gold in New York and selling it in London?

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Definitions:

Francis Ferdinand

Archduke Franz Ferdinand of Austria was the heir to the Austro-Hungarian Empire, whose assassination in 1914 sparked the beginning of World War I.

German Government

The political leadership and institutions that govern Germany, including the federal and state levels, following democratic and legal principles.

Austria-Hungary

A multinational empire in Central Europe formed by a dual monarchy of Austria and Hungary, which existed from 1867 until its dissolution in 1918 following World War I.

Triple Alliance

A military coalition formed by Germany, Austria-Hungary, and Italy in 1882, aimed at mutual defense and support in case of attack by other powers.

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