Which of the following represents an arbitrage transaction?
a. Traders buy silks where they are abundant and cheap, and haul them along a trail to another place where they would be quite scarce and valued.
b. A trader buys a block of government bonds in one market where it is temporarily priced below where it can be immediately resold in a different market.
c. Someone buys a block of Final Four tickets and scalp them at the game.
d. A senior citizen buys a block of theater tickets at a senior discount and scalps them to teenagers behind the theater.
e. All of the above are example of arbitrage.
e
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If the United States exports 6 million bushels of corn to Japan and thereby earns income with which it imports 3 million digital video recorders from Japan, the United States' terms of trade with Japan for corn and digital video recorders is 2:1.
a. true b. false
Define implicit costs and provide an example that shows why it is important to consider them in a discussion of profit.
What will be an ideal response?