1. On the Tokyo Stock Exchange, Honda Motor Company stock closed at 2,907 per share on Monday,...

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1. On the Tokyo Stock Exchange, Honda Motor Company stock closed at ¥2,907 per share on Monday, June 6, 2016. Honda trades as an ADR on the NYSE. One underlying Honda share equals one ADR. On June 6, 2016, the ¥/$ exchange rate was ¥107.57/$1.00.

a. At this exchange rate, what is the no-arbitrage U.S. dollar price of one ADR?

b. By comparison, Honda ADRs traded at $27.18. Do you think an arbitrage opportunity exists?

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ISE International Financial Management

ISBN: 9781260575316

9th International Edition

Authors: Cheol Eun, Bruce Resnick, Tuugi Chuluun

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Question Posted: Jul 25, 2024 08:04 AM

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1. On the Tokyo Stock Exchange, Honda Motor Company stock closed at 2,907 per share on Monday,...

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ISE International Financial Management

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