Law of One Price If the price of silver in England is £7.10 per ounce,what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5275?

Question

Quizplus · Accepted Answer

The Law of One Price states that in the absence of transportation costs and trade barriers, identical goods should have the same price in different markets when prices are expressed in a common currency. To find the price of silver in the United States, convert the price from pounds to dollars using the exchange rate: £7.10 / £0.5275 = $13.4597 per ounce.

Law of One Price If the Price of Silver in England