Which of the Following Is an Example of Arbitrage

question 38

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%.

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Definitions:

Normal Model

A statistical model that describes data distribution patterns that follow a bell curve or Gaussian distribution.

Strawberries

A sweet, red, heart-shaped fruit commonly grown in temperate regions, known scientifically as Fragaria × ananassa.

Farmers' Market

A public marketplace where local farmers and vendors sell their fresh produce and goods directly to consumers.

Normally Distributed

A statistical term describing data that follows a bell-shaped curve, where most observations cluster around a central peak.