A Riskless Stock Index Arbitrage Profit Is Possible If the Following

question 69

Multiple Choice

A riskless stock index arbitrage profit is possible if the following condition holds:

• A) F_0,T = S₀(1 + r_f - d)^T
• B) F_0,T > S₀(1 + r_f - d)^T
• C) F_0,T < S₀(1 + r_f - d)^T
• D) a and b
• E) b and c

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Definitions:

Sole Supplier

A single source from which a company purchases goods or services, often leading to increased negotiation power for the supplier but potential risks for the buyer.

Cash Conversion Cycle

A metric that measures the time span between a company's outlay of capital for supplies and receiving payment from the sale of those goods or services.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services provided on credit.

Inventory Conversion Period

The average time it takes for a company to turn its inventory into sales.