Suppose $1=10.5 pesos in new York and $1=9.6 pesos in mexico city. If you had $10,000 using arbitrage, your profits would be
A) $(10,000*10.5/9.6)-$10,000= $937.50
B) $[10,000*(10.5 -9.6)] = $9000
C) [10,000*(10.5 -9.6)] pesos = 9000 pesos
D) $(10,000*9.6/10.5) = $9,142.8613.
Ans: A) $(10,000*10.5/9.6)-$10,000= $937.50
Economics
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