If You Determine That the DAX-30 Index Futures Is Overpriced

question 35

Multiple Choice

If you determine that the DAX-30 Index futures is overpriced relative to the spot DAX-30 Index, you could make an arbitrage profit by

• A) buying all the stocks in the DAX-30 and selling put options on the DAX-30 Index.
• B) selling short all the stocks in the DAX-30 and buying DAX-30 futures.
• C) selling all the stocks in the DAX-30 and buying call options on the DAX-30 Index.
• D) selling DAX-30 Index futures and buying all the stocks in the DAX-30.

Understand the concept and application of hypothesis testing in statistical analysis.

Interpret the results and significance levels of hypothesis tests.

Understand the concept of power in hypothesis testing and its implications.

Apply t-test procedures for means including assumptions and calculations.

---

Definitions:

Passive Losses

Losses incurred from business activities in which the taxpayer does not materially participate, often from real estate.

Partnership

A legal arrangement in which two or more people share ownership of a business, including its profits, losses, and responsibilities.

Tax Preference Items

Items or income types that receive preferential tax treatment, often reducing the tax liability for an individual or entity.

AMT Calculation

The process of determining the amount of Alternative Minimum Tax an individual or corporation owes by adjusting certain tax preference items and deductions.