Assume You Find That the Price of a Futures Contract

question 71

Multiple Choice

Assume you find that the price of a futures contract is below the price given by spot-futures parity. Assuming there are no carrying charges, to make an arbitrage profit, traders will _________ in the cash market and _________ in the futures market.

• A) buy; buy
• B) buy; sell
• C) sell; sell
• D) sell; buy
• E) Insufficient information.

---

Definitions:

Unhelpful Thought Patterns

Cognitive processes that are negative or destructive, often contributing to psychological distress.

Rational-Emotive Psychotherapy

A form of cognitive-behavioral therapy focusing on identifying and changing irrational beliefs to alter emotional and behavioral responses.

Mindfulness-Based Cognitive Therapy

A psychological therapy designed to prevent the recurrence of depression by teaching mindfulness meditation as a way to disengage from negative cognitive patterns.

Interpersonal Therapy

Interpersonal Therapy is a form of psychotherapy that focuses on improving interpersonal relationships and communication patterns to help solve emotional problems.