Multiple Choice
On Commodity Exchange A it is possible to buy and sell crude oil at $117 per barrel, while on Commodity Exchange B crude oil can be bought and sold at $119 per barrel. If there are transaction costs of 1% when buying or selling on either exchange, what is the net effect of buying a barrel of oil on Exchange A and selling it on Exchange B?
A) $1.01
B) -$0.36
C) -$0.47
D) $0.99
Correct Answer:
Verified
Correct Answer:
Verified
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