Multiple Choice
On Commodity Exchange A, it is possible to buy and sell crude oil at $116 per barrel, while on Commodity Exchange B crude oil can be bought and sold at $117 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) -$1.33
B) -$0.67
C) $1.06
D) $1.60
Correct Answer:
Verified
Correct Answer:
Verified
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