Scenario: Sam Dearing, Budding International Financier

Scenario: Sam Dearing, Budding International Financier
Sam Dearing is a summer intern in the arbitrage department at a prestigious Wall Street firm. Sam is hoping to be offered a full-time position at the firm after he graduates from college, and therefore, Sam knows that he must demonstrate a strong understanding of how exchange rates work.
-Sam also knows that ________.

A) the price of a kilogram of wheat in France is $1.25
B) the price of a kilogram of wheat in France is $.80
C) the law of one price is valid in the international wheat market
D) there is no arbitrage opportunity because the price of wheat is lower in France