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Kristin Was Shopping in New York Last Week and Saw

Question 46

Multiple Choice

Kristin was shopping in New York last week and saw a Coach purse for $210. When she returned to London, she saw that same purse for £105. She knew that the exchange rate was one pound for every two dollars. Her shopping experience demonstrates


A) hedging.
B) arbitrage.
C) currency swap.
D) exchange rate risk.
E) the law of one price.

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