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Please explain how to solve. The correct answer is selected below. Return to que 32 TB MC Qu. 02-26 Suppose that Britain pegs the pound...
Please explain how to solve. The correct answer is selected below.
Return to que 32 TB MC Qu. 02-26 Suppose that Britain pegs the pound... 2.7 Suppose that Britain pegs the pound to gold at the market price of 6 per ounce, and the United States pegs the dollar to gold at the market price of $36 per ounce. If the official exchange rate between pounds and U.S. dollars is $5 = $1. Which of the following trades is profitable? points Multiple Choice Start with 100 and trade for $500 at the official exchange rate. Redeem the $500 for 13.89 ounces of gold. Trade the gold for $83.33 a Start with $100 and buy gold. Sell the gold for 16.67. Sell the pounds at the official exchange rate. Start with 100 and buy gold. Sell the gold for $600. O Start with $500 and trade for 100 at the official exchange rate. Redeem the 100 for 16 2/3 ounces of gold. Trade the gold for $600Step by Step Solution
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