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they build off each other please answer both Question 14 2.86 pts Please assume that the following took place during the classical Gold Standard era
they build off each other please answer both
Question 14 2.86 pts Please assume that the following took place during the classical Gold Standard era (1875-1914): Lucky, a New York-based investor, recently borrowed 700,000 from a British bank under his name to finance possible investments in British firms or real assets. Lucky was recently informed that the U.S. dollar is pegged at $36 = 1 ounce of gold, while the British pound is pegged at 6 = 1 ounce of gold. Lucky also heard from Tweed, his friend from a local study group, that the U.S. dollar and British pound trade at $4.8 = 1 when directly traded. Is there any arbitrage from foreign exchange rates Lucky can take advantage of? If so, how much profit will Lucky be able to generate, provided that he borrowed 700,000? Assume that the interest rate for the 700,000 Lucky borrowed is 5.0%, and it will cost 4,500 to ship gold from the United Kingdom to the United States. 142,000 175,000 135,500 O Lucky will not have any arbitrage opportunities under the given facts. Question 15 2.86 pts How would our answer change if the U.S. dollar and British pound trade at $7.2 = 1 when directly traded? 100,500 123,245 135,500 We do not have sufficient information to answer thisStep by Step Solution
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