What Is Arbitrage? Explain Why Arbitrage Drives the Contract Price

question 29

Essay

What is arbitrage? Explain why arbitrage drives the contract price of futures to the price of the underlying asset on the expiration date,for prices above and below the asset price.

Recognize an auditor's responsibilities upon discovering illegal activities during an audit.

Evaluate the liability issues of accountants under the 1933 Securities Act regarding misleading registration statements.

List the services that are prohibited for accounting firms to perform for audit clients under the Sarbanes-Oxley Act.

Understand the legal and ethical considerations regarding the confidentiality of client information obtained by accountants.

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Definitions:

Highly Cohesive Groups

Groups that exhibit strong bonds among members, resulting in high levels of loyalty, teamwork, and often, improved performance.

Tendency

An inclination towards a particular characteristic, behavior, or outcome, often influenced by inherent traits or external factors.

Structured Rules

Clearly defined directives or procedures that govern actions and decision-making within an organization or system.

Group Decision-making

The process whereby a group of individuals comes together to make a decision, often incorporating a variety of perspectives and reaching a consensus.