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Suppose the pound is pegged to gold at GBP4 per ounce in the UK, while the dollar is pegged at USD 5 per ounce in

Suppose the pound is pegged to gold at GBP4 per ounce in the UK, while the dollar is pegged at USD 5 per ounce in the US. The current exchange rate is 1.5 USD/GBP. The shipping costs are GBP2 per ounce between the US and the UK. Is there an arbitrage opportunity and if so, how would you take advantage of it?

	A.	Yes, buy gold in the US and sell gold in the UK
	B.	No, there is no arbitrage opportunity
	C.	Yes, buy gold in the UK and sell gold in the US
	D.	None of the above

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