Show how can capture arbitrage profit by trading bug stock

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Reference no: EM131457872

Question: You can trade Boring Unreliable Gadget Inc.'s stock for $77 per share in the United States and for €50 in Europe. Assume a brokerage commission of $0.10 per share in the United States and €0.10 in Europe. A foreign exchange dealer quotes a bid price of $1.5000 for each euro and offers them for $1.5010.

a. Are these prices correct?

b. If not, show how you can capture arbitrage profit by trading BUG stock.

Reference no: EM131457872

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