On the Tokyo Stock Exchange, Honda Motor Company stock closed at 4,006 per share on Friday, April 12, 2013. Honda trades as an ADR on the NYSE. One underlying Honda share equals one ADR. On April 11, 2013, the /$ exchange rate was 99.89/$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 $40.05. Do you think an arbitrage opportunity exists?