10. One share of Daimler AG trades at the Frankfurt Stock Exchange for 34.70. Daimler's ADR, which equals two shares of Daimler AG, trades in the U.S. for $104. a) (4 points) (i) Define the Law of One Price and explain how it applies in the present case. (ii) Find the no-arbitrage implied exchange rate from the ADR. Solution: b) (3 points) Suppose you observe the exchange rate quotes in the table below. BID ASK 1 0.7930 20.7970 $1 - 0.5810 0.5830 Find the cross rate for S($/) (Bid and Ask). Solution