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Kobotan [32]
3 years ago
12

If a pair of shoes in the United States costs $45, and a pair of the exact same shoes is sold in Mexico for 430 pesos while the

exchange rate is E = $0.1100/pesos, what arbitrage opportunities exist (if any)? Ignoring transactions costs, explain how you would take advantage of this.
Business
1 answer:
Svetach [21]3 years ago
7 0

Answer:

The correct answer is profit of $2.3 by selling it in Mexico.

Explanation:

According to the scenario, the computation of the given data are as follows:

In the United states Cost of shoes = $45

In Mexico, Cost of Shoes = 430 Pesos ( where $0.1100 = 1 pesos)

So, 430 Pesos = 430 × $0.1100 = $47.3

So, we can calculate the profit to sell in Mexico as follows:

Profit to sell in Mexico  = Sell price in Mexico - Sell price in US

= $47.3 - $45

= $2.3

So, the arbitrage opportunity exist by buying the shoes in Pesos and selling it in Mexico, one can make a profit of $2.3 per shoes.

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3 years ago
In a ________ economy, the government is minimally involved in the functioning of the economy but does act to protect consumers
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Answer:

mixed

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An economy is a function of how money, means of production and resources (raw materials) are carefully used to facilitate the demands and supply of goods and services to meet the unending needs or requirements of the consumers.

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I. Command economy.

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3 0
3 years ago
Read 2 more answers
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6 0
3 years ago
It costs a family of two $25 to go to the state fair, and a family of six $65. Find the equation, rate of change, and initial va
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y = 10x + 5 is the required equation.

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A family of two to go to state fair is $25

A family of six to go to state fair is $65

So the 2 points are (2,25) and (6,65)

Rate of change = (y2-y1)/ (x2-x1)

  Plugin the values, we will get,

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Equation can be written as,

(y - y₁) / (y₂ - y₁) = (x-x₁)/(x₂-x₁)

(y-25)/(65-25) = (x-2)/(6-2)

(y-25)/ 40 = (x-2) / 4

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Dividing the equation by 4, we will get,

y = 10x + 5 is the equation required.

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