Use the Information for the Question(s) Below

question 72

Multiple Choice

Use the information for the question(s) below.
An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of two shares of International Business Machines (IBM) , three shares of Merck (MRK) , and three shares of Citigroup Inc. (C) . Suppose the current market price of each individual stock are shown below:

-Suppose that the ETF is trading for $424.50; you should

• A) sell the ETF and buy 2 shares of IBM, 3 shares of MRK, and 3 shares of C.
• B) sell the ETF and buy 3 shares of IBM, 2 shares of MRK, and 3 shares of C.
• C) buy the ETF and sell 2 shares of IBM, 3 shares of MRK, and 3 shares of C.
• D) do nothing, no arbitrage opportunity exists.

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Definitions:

Functional Pattern

An organizational structure in communication that arranges information according to its purpose or function.

Problem-solving Pattern

A methodical approach employed in identifying, analyzing, and addressing issues or challenges.

Compare-contrast Pattern

A method of organizing text that discusses the similarities and differences between two or more subjects.

Direct Pattern

A direct pattern in communication involves presenting the main idea or message at the beginning, followed by supporting details, often used for clear and straightforward messages.