On the Tokyo Stock Exchange, Honda Motor Company's stock closed at 2,707 per share on Monday, June

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On the Tokyo Stock Exchange, Honda Motor Company's stock closed at ¥2,707 per share on Monday, June 4, 2016. Honda trades as an ADR on the NYSE. One underlying Honda share equals one ADR. On June 4, 2016, the ¥/$ spot exchange rate was ¥307.57/$2.00.

a. At this exchange rate, what is the no-arbitrage U.S. dollar price of one ADR?

b. By comparison, Honda ADRs traded at $25.18. Do you think an arbitrage opportunity exists?

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International Financial Management

ISBN: 9781260788860

9th Edition

Authors: Cheol Eun

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Posted Date: Mar 14, 2024 01:46 AM

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On the Tokyo Stock Exchange, Honda Motor Company's stock closed at 2,707 per share on Monday, June

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International Financial Management

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