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Suppose the Exchange Rate Is Such That 1 U

Question 21

Multiple Choice

Suppose the exchange rate is such that 1 U.S.dollar equals 1 euro in New York and 0.9 euros in Paris.An arbitrageur would sell euros


A) in New York and buy U.S.dollars in Paris
B) in Paris and buy U.S.dollars in New York
C) in New York while buying them in Paris
D) in Paris while buying them in New York
E) at the same price in both cities

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