On Commodity Exchange A, It Is Possible to Buy and Sell

question 71

Multiple Choice

On Commodity Exchange A, it is possible to buy and sell crude oil at $116 per barrel, while on Commodity Exchange B crude oil can be bought and sold at $117 per barrel. If there are transaction costs of 1% when buying or selling on either exchange, what is the net effect of buying a barrel of oil on Exchange A and selling it on Exchange B?

• A) -$1.33
• B) -$0.67
• C) $1.06
• D) $1.60

---

Definitions:

P-Value

The probability of observing results at least as extreme as those measured when the null hypothesis is true, used in hypothesis testing.

Simple Random Sample

A segment of a statistical population where all individuals have the same likelihood of being selected.

Hypothesis Testing

A method of statistical inference used to decide whether there is enough evidence in a sample of data to support a particular belief or hypothesis about a population.

Tentative Beliefs

Preliminary conclusions or hypotheses that are subject to validation or revision based on further evidence or analysis.