A U.S. institutional investor would like to purchase 10,000 shares of Lafarge. Lafarge is a
French firm that trades on the Paris Bourse, the London stock exchange, and the NYSE
as an ADR. At the NYSE, one depositary receipt is equivalent to one-fourth of a Lafarge
share. The U.S. investor asks its brokers to quote net prices, without any commissions,
in the three trading venues. There is no stamp tax in London on foreign shares listed
there. The stock quotes are as follows:
New York: $24.07-24.37
London: £66.31-67.17
Paris:
€99.40-100.30
The exchange rate quotes from banks are as follows:
$/£ = 1.4575-1.4580
$/€ = 0.9691-0.9695
Compare the dollar costs of purchasing 10,000 shares, or its equivalent, in New York,
London, and Paris.