USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 38

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The S&P 500 stock index is at 1100. The annualized interest rate is 3.5 percent, and the annualized dividend is 2 percent.
-Refer to Exhibit 15.9. If the futures contract was currently available for 1050, indicate the appropriate strategy that would earn an arbitrage profit.

• A) long futures and short the index
• B) short futures and long the index
• C) long futures and long the index
• D) short futures and short the index
• E) None of these are correct.

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Definitions:

Recency Effect

The tendency to remember more recent information better than earlier information, often impacting how decisions and judgments are made.

Political Debate

A formal discussion where participants argue on varying perspectives on political issues, often aiming to persuade public opinion or policy.

Candidate Preference

The inclination or favoritism towards a specific candidate in an election or selection process based on certain criteria or personal biases.

Influenced

The capacity or power of persons or things to be a compelling force on the actions, behavior, opinions, etc., of others.