If a Stock Index Futures Contract Is Overpriced, You Would

question 52

Multiple Choice

If a stock index futures contract is overpriced, you would exploit this situation by

• A) selling both the stock index futures and the stocks in the index.
• B) selling the stock index futures and simultaneously buying the stocks in the index.
• C) buying both the stock index futures and the stocks in the index.
• D) buying the stock index futures and selling the stocks in the index.
• E) None of the options are correct.

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Definitions:

Balance Sheet Accounts

Accounts that appear on the balance sheet, including assets, liabilities, and shareholders' equity accounts, reflecting the financial position of a business.

Real Accounts

Accounts related to assets, liabilities, and equity that are shown on the balance sheet, maintaining their balances over time and not closed at the end of the accounting year.

Permanent Accounts

Accounts on the balance sheet whose balances are carried over into the next accounting period.

Post-closing Trial Balance

A list of all company accounts that remain after adjusting entries and closing entries have been made, used to test the balance of debits and credits.