Arbitrage refers to the act of
A) buying a product in one market at a low price and reselling in another market at a higher price.
B) suing a producer for illegal business practices.
C) trading in the foreign exchange market.
D) resolving a dispute in front of an arbitrator instead of a court of law.
A
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The gravity model suggests that over time
A) trade between neighboring countries will increase. B) trade between all countries will increase. C) world trade will eventually be swallowed by a black hole. D) trade between Earth and other planets will become important. E) the value of trade between two countries will be proportional to the product of the two countries' GDP.
Which of the following is a characteristic of a real option?
a. The call option on a stock exercised if some average of the prices of its components passes a critical level. b. The right to postpone construction on the basis of net present value calculation. c. The put option on a stock that need to be paid for (at a predetermined price) if they are actually exercised. d. The right to sell an option at the strike price.
Assume that between 1998 and 2008, nominal GDP increased from $7 trillion to $12 trillion and that the price index rose from 100 to 133.3 . Which of the following expresses GDP for 2008 in terms of 1998 prices?
a. $7.5 trillion b. $9.0 trillion c. $9.5 trillion d. $16.0 trillion
Refer to the graph shown. To maintain the price of euros at $1.20, the European Central Bank must buy:
A. Q2 euros. B. Q0 - Q2 euros. C. Q1 - Q0 euros. D. Q1 - Q2 euros.