If a Firm Engages in Risk Management to Capture Arbitrage

question 38

Multiple Choice

If a firm engages in risk management to capture arbitrage profits,what is it easy to overlook?

• A)the additional credit risk it assumes
• B)the cost is greater than the benefit
• C)the market risk is high
• D)all of the above
• E)none of the above

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Definitions:

Slavery

A system in which individuals are owned by others, deprived of personal freedom and forced to perform labor or services.

Fifteenth Amendment

An amendment to the U.S. Constitution that prohibits the federal government and states from denying a citizen the right to vote based on their "race, color, or previous condition of servitude."

Right to Vote

The entitlement of citizens to participate in their government's election process to choose leaders and voice opinions on legislation and policies.

Thirteenth Amendment

An amendment to the U.S. Constitution that abolished slavery and involuntary servitude, except as a punishment for a crime.