Suppose the Futures Price Is Below the Price Predicted by IRP.What

question 33

Multiple Choice

Suppose the futures price is below the price predicted by IRP.What steps would assure an arbitrage profit?

• A)Go short in the spot market,go long in the futures contract.
• B)Go long in the spot market,go short in the futures contract.
• C)Go short in the spot market,go short in the futures contract.
• D)Go long in the spot market,go long in the futures contract.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.