If a bottle of fine French wine costs US$250 in the U.S., 2500 rand in South Africa, there are no transaction costs, and the exchange rate is 5 rand/US$, then
A) there is an arbitrage opportunity by buying the wine in the U.S., and selling it in South Africa and the price in South Africa will drop.
B) there is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will drop.
C) here is an arbitrage opportunity by buying the wine in South Africa., and selling it in the U.S. and the price in the U.S. will rise.
D) there is no arbitrage opportunity.
A
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A rise in the value of a currency is called a(n)
A) consolation. B) integration. C) appreciation. D) depreciation.
Liquidity is the
A) speed with which the price of an asset changes as its intrinsic value changes. B) inverse of the velocity of money. C) same as the velocity of money. D) ease with which an asset can be converted into money.
Economists make assumptions in order to
a. mimic the methodologies employed by other scientists. b. minimize the number of experiments that yield no useful data. c. minimize the likelihood that some aspect of the problem at hand is being overlooked. d. focus their thinking on the essence of the problem at hand.
If the positive effect of a greater quantity demanded more than offsets the negative effect of a lower price, then total revenue rises
Indicate whether the statement is true or false