If You Determine That the S&P 500 Index Futures Is

question 11

Multiple Choice

If you determine that the S&P 500 Index futures is overpriced relative to the spot S&P 500 Index, you could make an arbitrage profit by

• A)buying all the stocks in the S&P 500 and selling put options on the S&P 500 Index.
• B)selling short all the stocks in the S&P 500 and buying S&P Index futures.
• C)selling all the stocks in the S&P 500 and buying call options on the S&P 500 Index.
• D)selling S&P 500 Index futures and buying all the stocks in the S&P 500.

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Definitions:

Enforceable Agreement

A legally binding contract that can be upheld and compelled by law in a court of justice.

Earnest

Serious in intention, purpose, or effort; sincerely zealous.

Sale of Goods Act

Legislation that regulates the sale of goods, ensuring rights, obligations, and remedies in commercial transactions, making sure products sold are as advertised and fit for purpose.