Which One of the Following Represents an Arbitrage Opportunity

question 89

Multiple Choice

Which one of the following represents an arbitrage opportunity?

• A)stock price of $18 and strike price of $20
• B)call price of $.40 and put price of $.40
• C)PCP-implied put price of $.30 and call price of $.28
• D)PCP-implied put price of $.30 and put market price of $.31
• E)PCP-implied call price of $.20 and a put market price of $.22

Identify the role and effects of automatic dividend reinvestment plans.

Appreciate the impact of flotation costs on dividend decisions.

Understand the clientele effect and its influence on dividend policy.

Recognize the restrictions imposed by bond indentures on dividend policies.

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Definitions:

Noncontributory

Pertains to employee benefit plans where the employer bears the full cost of the benefits without requiring financial contributions from employees.

Employer Contributes

Refers to the financial or resource input made by an employer towards employee benefits, retirement plans, insurance, or other compensatory mechanisms.

Tax Deductible

Refers to certain expenses that individuals or businesses can subtract from their gross income to reduce taxable income, thereby lowering overall tax liability.

Defined Benefit Plan

A type of pension plan in which an employer promises a specified pension payment upon retirement, based on the employee's earnings and tenure.