Use the Table for the Question(s)below

question 23

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, a large Coke and a large fries. 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)No, no arbitrage opportunity exists.
• B)Yes, buy a value meal and then sell the Big Mac, Coke and fries to make arbitrage profit of $0.38.
• 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.

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Definitions:

RS-232 Port

A standard for serial communication transmission of data that connects computers, terminals, and various peripherals.

Printer Output

The final product generated by a printer, including documents, photos, or any other material that has been processed from digital to physical form.

Numeric Digits

The characters 0 through 9 used in the representation of numbers, essential in mathematics and digital systems.

DMM

Digital Multimeter, a testing tool used to measure electrical values such as voltage, current, and resistance.