The stock polarbear trades on both the south pole stock, Ask an Expert

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The stock PolarBear trades on both the South Pole Stock Exchange and the North Pole Stock Exchange.

(a) Suppose the price on the North Pole is $18. What does the No-Arbitrage Condition say about the price on the South Pole? (Assume no trading costs.)

(b) Suppose the price on the North Pole is $18 and the price on the the South Pole is $17? How can you make an arbitrage profit? (Assume no trading costs.)

(c) Suppose that the price on the North Pole is $18, that buying or selling on the North Pole costs $2, and that buying or selling on the South Pole is free. What does the No-Arbitrage Condition say about the price on the South Pole?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91270839

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