Question: Problem 1.29 What is arbitrage? Explain the arbitrage opportunity when the price of a dually listed mining company stock is $50 on the New York

Problem 1.29

What is arbitrage? Explain the arbitrage opportunity when the price of a dually listed

mining company stock is $50 on the New York Stock Exchange and $52 CAD on the Toronto

Stock Exchange. Assume that the exchange rate is such that 1 USD equals 1.01 CAD.

Explain what is likely to happen to prices as traders take advantage of this opportunity.

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