Multiple Choice
A McDonald's Big Mac value meal consists of a Big Mac Sandwich,Large Coke,and a Large Fry.Assume that there is a competitive market for McDonald's food items and that McDonald's sells the Big Mac value meal for $4.79.Does an arbitrage opportunity exist and,if so,how would you exploit it and how much would you make on one extra value meal?
A) Yes, buy an extra value meal and then sell the Big Mac, Coke, and Fries to make an arbitrage profit of $0.68
B) No, no arbitrage opportunity exists
C) Yes, buy a Big Mac, Coke, and Fries then sell the value meal to make an arbitrage profit of $1.09
D) Yes, buy a Big Mac, Coke, and Fries then sell the value meal to make an arbitrage profit of $0.68
Correct Answer:
Verified
Correct Answer:
Verified
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