If You Determine That the DAX-30 Index Futures Is Underpriced

question 12

Multiple Choice

If you determine that the DAX-30 Index futures is underpriced relative to the spot DAX-30 Index, you could make an arbitrage profit by

• A) buying all the stocks in the DAX-30 and selling put options on the DAX-30 Index.
• B) selling short all the stocks in the DAX-30 and buying DAX-30 futures.
• C) selling all the stocks in the DAX-30 and buying call options on the DAX-30 Index.
• D) buying DAX-30 Index futures and selling all the stocks in the DAX-30.
• E) None of the options are correct.

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Definitions:

Diversity of Citizenship

A legal principle that allows federal courts to hear lawsuits between parties from different states or countries, provided the amount in controversy exceeds a specified threshold.

Challenge for Cause

A legal objection during jury selection, where a party seeks to disqualify a potential juror for a specific, articulated reason suggesting bias or inability to serve impartially.

Peremptory Challenge

A prerogative in the process of selecting jurors that allows lawyers to exclude a specific number of prospective jurors without disclosing any justification.

Quasi In Rem

A legal term referring to action taken against the defendant's property to obtain jurisdiction over an individual.