Which of the Following Statements Is True

question 14

Multiple Choice

Which of the following statements is true?

• A) Pure arbitrage involves buying blocks of securities in anticipation of some information release.
• B) Risk arbitrage involves buying an asset in one market at one price and selling it immediately in another market at a higher price.
• C) Pure arbitrage involves buying blocks of securities in anticipation of some information release, risk arbitrage involves buying an asset in one market at one price and selling it immediately in another market at a higher price and program trading is associated with seeking a pure arbitrage between a cash market price and the futures market price of that instrument.
• D) None of the listed options are correct.

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Definitions:

Company's Assets

This encompasses all items of value owned by a company, including cash, real estate, equipment, and intellectual property, which are utilized in generating revenue.

Limited Liability

Freedom of stockholders from personal liability for the debts of the corporation.

Double Taxation

A taxation principle referring to income taxes that are paid twice on the same source of earned income, often seen in corporate dividends.

Limited Liability

A legal structure for a business where the owners' personal assets are protected from the company's debts and liabilities, limiting their risk to the amounts they have invested in the company.