Suppose That the Pound Is Pegged to Gold at £20

Suppose that the pound is pegged to gold at £20 per ounce and the dollar is pegged to gold at $35 per ounce.This implies an exchange rate of $1.75 per pound.If the current market exchange rate is $1.60 per pound,how would you take advantage of this situation? Hint: assume that you have $350 available for investment.

A) Start with $350.Buy 10 ounces of gold with dollars at $35 per ounce.Convert the gold to £200 at £20 per ounce.Exchange the £200 for dollars at the current rate of $1.80 per pound to get $360.
B) Start with $350.Exchange the dollars for pounds at the current rate of $1.60 per pound.Buy gold with pounds at £20 per ounce.Convert the gold to dollars at $35 per ounce.
C) both of the options
D) none of the options