Which One of the Following Represents an Arbitrage Opportunity

question 10

Multiple Choice

Which one of the following represents an arbitrage opportunity?

• A) stock price of $18 and strike price of $20
• B) call price of $0.40 and put price of $0.40
• C) PCP-implied put price of $0.30 and call price of $0.28
• D) PCP-implied put price of $0.30 and put market price of $0.31
• E) PCP-implied call price of $0.20 and a put market price of $0.22

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Definitions:

General Ledger

A ledger that contains all asset, liability, and owner’s equity accounts.

Normal Standards

Predetermined costs or benchmarks that are established based on the historical performance and expected future costs, used to measure production efficiency and budget compliance.

Rigorous

Characterized by strict precision, accuracy, and careful attention to detail.

Materials Quantity Variance

The difference between the actual amount of materials used in production and the standard amount expected to be used, multiplied by the standard cost per unit of material.