Question
You are at a trading card convention, and observe that for a certain card, a dealer is willing to buy the card for $100, and
You are at a trading card convention, and observe that for a certain card, a dealer is willing to buy the card for $100, and sell the card for $120. At the same convention, a different dealer quotes a BID-ASK spread of $125-$140 for the very same card. Which statement is false:
There is an arbitrage opportunity at the convention. | ||
The market for trading cards is an inefficient market. | ||
If the dealers ran into each other, they would happily trade with each other. | ||
If you had to pay a 2% tax when you bought the card, you could not make a profit from this situation after taking transactions costs into account. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started