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:

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, leading to increased interconnectedness.

Solidarity Theory

A sociological theory that emphasizes the importance of unity and agreement within a society in maintaining order and support among different groups.

Frame Alignment Theory

A sociological theory that explains how social movements gain support by aligning their activities and ideas with the frames of potential supporters.

New Social Movement Theory

An analytical approach focusing on the distinctive features of social movements since the 1960s, emphasizing identity, culture, and decentralized structures.