Use the Following Information to Answer Questions 22 Through 24

question 13

Multiple Choice

Use the following information to answer questions 22 through 24.On October 1,the one-month LIBOR rate is 4.50 percent and the two month LIBOR rate is 5.00 percent.The November Fed funds futures is quoted at 94.50.The contract size is $5,000,000.
-All of the following are limitations to Fed funds futures arbitrage,except

• A)Fed funds rates are determined by Federal Reserve Bank policy
• B)basis risk between Fed funds and LIBOR
• C)repo rate is variable for the trading horizon
• D)settlement is based on average in delivery month
• E)transaction costs

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Definitions:

General Partner

In a limited partnership, a partner who assumes responsibility for the management of the partnership and has full liability for all partnership debts.

Limited Partnership

A business structure where at least one partner has unlimited liability and one or more partners have limited liability, limiting their personal risk.

Capital Contributed

The total amount of money and other valuables that shareholders or owners have invested in a company or partnership.

Full Responsibility

Full Responsibility implies taking complete accountability for one's actions or the outcomes of those actions, without excuses or shifting blame.