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What is the no-arbitrage u.s. dollar price of one adr

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On the Milan bourse, Fiat stock closed at EUR14.67 per share on Tuesday, February 26, 2008. Fiat trades as and ADR on the NYSE. One underlying Fiat share equals one ADR. On February 26, the $/EUR spot exchange rate was $1.4889/EUR1.00.

a. At this exchange rate, what is the no-arbitrage U.S. dollar price of one ADR?
b. By comparison, Fiat ADRs closed at $21.94. Do you think an arbitrage opportunity exists?

Reference no: EM13505592

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