Use the Following Information to Answer the Question(s) Below

question 14

Multiple Choice

Use the following information to answer 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 Apple Inc. (APPL) , one share of Google (GOOG) , and ten shares of Microsoft (MSFT) . Suppose the current stock prices of each individual stock are as shown below:

-Pfizer Inc.(PFE) stock is currently trading on the NYSE with a quoted bid of $18.35 and an ask price of $18.40.At the same time NASDAQ dealers are posting for following bid and ask prices for PHE: Which of these NASDAQ represents an arbitrage opportunity when compared to the NYSE quotes?

• A) Only NASDAQ dealer #1
• B) Only NASDAQ dealer #2
• C) Only NASDAQ dealer #3
• D) Both NASDAQ dealer #1 and dealer #3
• E) None of the above

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Definitions:

Dividend Payout Ratio

A financial metric that measures the percentage of a company's net income that is paid out to shareholders in the form of dividends.

External Financing

Funds a business acquires from outside sources to finance its operations, including loans, issue of shares, bonds, and other financial instruments.

Maximum Capacity

The highest level of output that a company can sustain within a given period without compromising product quality or operational efficiency.

External Financing

Obtaining funds from outside sources, such as loans, stock issues, or bonds, to finance business operations or investments.