If You Wanted to Take Advantage of a Risk-Free Arbitrage

question 60

Multiple Choice

If you wanted to take advantage of a risk-free arbitrage opportunity,you should take a short position in _________ and a long position in an equally weighted portfolio of _______.

• A)A, B and C
• B)B, A and C
• C)C, A and B
• D)A and B, C
• E)none of the above

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Definitions:

Comparative Income Statement

A financial statement showing the revenues, expenses, and net income of a company over multiple periods, facilitating analysis of financial performance over time.

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life.

Production Equipment

The machinery and tools used in the manufacturing process to produce finished goods.

Supervisory Salaries

The compensation paid to individuals in charge of overseeing the work of other employees, ensuring that tasks are performed efficiently and effectively.