Which of the Following Is an Example of 'Arbitrage

question 57

Multiple Choice

Which of the following is an example of 'arbitrage'?

• A)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.
• B)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.
• C)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%.
• D)A metals merchant is offered $108 000 in one year for $100 000 of palladium today, when the interest rate is 10%.

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