Which of the following is an example of an arbitrage opportunity?
A) You can play a game in which you will win $100,000 if you draw any card but an ace out of a 52-card deck. If you draw an ace, however, you pay only $1.00.
B) You have found an investment that is guaranteed to offer you a 100% return on your investment in one year.
C) You are able to borrow money today for one year at 3% and simultaneously invest the proceeds in a project that is guaranteed to return 15% at the end of the year. There are no
Transaction costs associated with either the loan or the investment.
D) None of the above is an arbitrage opportunity.
Correct Answer:
Verified
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