On the Milan bourse, Fiat stock closed at EUR11.17per share on Tuesday, August 19, 2002.Fiat trades as
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Question:
On the Milan bourse, Fiat stock closed at EUR11.17per share on Tuesday, August 19, 2002.Fiat trades as an ADR on the NYSE. One underlying Fiat share equals one ADR. On August 19, the $/EUR spot exchange rate was $0.9764/EUR1.00.
a. At this exchange rate, what is the no-arbitrage U.S. dollar price of one ADR?
b. By comparison, Fiat ADRs closed at $21.94. Do you think an arbitrage opportunity exists?
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
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