If You Determine That the S&P 500 Index Futures Is

question 65

Multiple Choice

If you determine that the S&P 500 Index futures is overpriced relative to the spot S&P 500 Index, you could make an arbitrage profit by

• A)buying all the stocks in the S&P 500 and selling put options on the S&P 500 Index.
• B)selling short all the stocks in the S&P 500 and buying S&P Index futures.
• C)selling all the stocks in the S&P 500 and buying call options on the S&P 500 Index.
• D)selling S&P 500 Index futures and buying all the stocks in the S&P 500.
• E)None of the options

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Definitions:

Medulla

A section of the brainstem involved in autonomic functions, such as breathing and heart rate.

Cerebellum

A region of the brain that plays an important role in motor control and may also be involved in some cognitive functions such as attention and language.

Diathesis-Stress Model

Model that asserts that only when a diathesis or vulnerability interacts with a stress or trigger will a disorder emerge.

Vulnerability

The state in which there is a risk of encountering harm or assault, emotionally or physically.