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An investor notices that an ounce of gold is priced at $318 in London and $325 in New York. What action could the investor take to try to profit from the price discrepancy? Which of the six trading activities would this be? What might be some impediments to the success of the transaction?

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This solution discusses each part of the following scenario:

An investor notices that an ounce of gold is priced at $318 in London and $325 in New York. What action could the investor take to try to profit from the price discrepancy? Which of the six trading activities would this be? What might be some impediments to the success of the transaction?

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What action could the investor take to try to profit from the price discrepancy?
- The investor would want to buy the gold at the cheaper price, which is $318 in London. The investor would then want to go to New York and sell the gold for $325, which would render the investor at profit of $7 per ounce.

Which of the six trading activities would this be?
- This ...

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