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Author Question: Use the table for the question(s) below.Consider the following prices from a McDonald's ... (Read 52 times)

clmills979

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Use the table for the question(s) below.

Consider the following prices from a McDonald's Restaurant:

Big Mac Sandwich$2.99
Large Coke$1.39
Large Fry$1.09


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 exists and if so how would you exploit it and how much would you make on one value meal?
◦ Yes, buy a Big Mac, Coke, and fries, then sell a value meal to make arbitrage profit of $1.09.
◦ Yes, buy a Big Mac, Coke, and fries, then sell a value meal to make arbitrage profit of $0.68.
◦ Yes, buy a value meal and then sell the Big Mac, Coke, and fries to make arbitrage profit of $0.68.
◦ No, no arbitrage opportunity exists.


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Marked as best answer by clmills979 on Jul 9, 2019

yotaSR5

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clmills979

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Reply 2 on: Jul 9, 2019
Excellent


adf223

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

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