When the Price of a Basket of Stocks and the Price

question 9

Multiple Choice

When the price of a basket of stocks and the price of a futures agreement in those stocks diverge enough to enable someone to make a riskless profit, this is

• A)an equilibrium price.
• B)trading opportunity enhancement.
• C)index-arbitrage trading.
• D)Both b and c are correct.

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Definitions:

Gross Negligence

A reckless disregard for the safety or lives of others, showing a substantial failure to perform any due diligence or take reasonable precautions.

Punitive Damages

Monetary compensation awarded to an aggrieved party, beyond actual damages, intended to punish the defendant and deter similar conduct.

Dog Running Free

The act of a dog moving freely in a public or private space without being restrained by a leash or confined area.

Res Ipsa Loquitur

is a legal doctrine that allows for the assumption of negligence in cases where the accident that occurred is of a type that usually doesn't happen without negligence.