To Take Advantage of an Arbitrage Opportunity, an Investor Would

question 35

Multiple Choice

To take advantage of an arbitrage opportunity, an investor would I) construct a zero-investment portfolio that will yield a sure profit.
II) construct a zero-beta-investment portfolio that will yield a sure profit.
III) make simultaneous trades in two markets without any net investment.
IV) short sell the asset in the low-priced market and buy it in the high-priced market.

• A)I and IV
• B)I and III
• C)II and III
• D)I, III, and IV

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