Suppose that the yen-dollar foreign exchange rate changes from 130 yen per dollar to 140 yen per dollar. Then the yen has
A) depreciated against the dollar, and the dollar has appreciated against the yen.
B) depreciated against the dollar, and the dollar has depreciated against the yen.
C) appreciated against the dollar, and the dollar has appreciated against the yen.
D) appreciated against the dollar, and the dollar has depreciated against the yen.
A
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Suppose the price of crude oil is $95 per barrel in New York and $85 per barrel in Texas, and the transaction costs for trading between the two markets are $15 per barrel. What actions should you take to arbitrage this price difference?
A) Buy oil in Texas and sell oil in NY B) Sell oil in Texas and buy oil in NY C) Buy oil in both markets and wait for higher prices D) Do not buy or sell oil in either market
If an investor's primary stock holding is currently Exxon Mobil, the purchase of which of the following stocks would provide the investor with the largest reduction in risk?
a. BP / Amoco. b. Shell Oil Corporation. c. General Motors. d. Texaco.