1 a) In an M&M frictionless environment, where there are no taxes and contracts are costless to make and enforce, the wealth of the shareholder is the same no matter what capital structure the firm adopts. In such an environment, neither the stock price nor shareholders' wealth would be affected
1 a) Buy IBX stock in Tokyo and simultaneously sell them in NY, and your arbitrage profit is $2 per share. b)The prices will converge. c)Instead of the prices becoming exactly equal, there can remain 1%% discrepancy between