This question pertains to the Law of One Price.

The stock of ABC Inc. is listed on both the Australian stock exchange and the U.S. stock exchange.

On the Australian stock exchange, each ABC share has a price of AUD 10.20.

On the U.S. stock exchange, each ABC share has a price of USD 7.50.

Absent financial frictions, what is the no-arbitrage AUD/USD exchange rate? Express your answer in AUD per one USD.

1 - 1.36

2 - There is not enough information to answer this question.

3 - 0.74