Assume that the price of a futures contract is higher than the price of the underlying security during the delivery period. Arbitrageurs would
A) buy the futures, simultaneously sell the underlying asset, and pocket the price difference.
B) sell the futures, simultaneously buy the underlying asset, and pocket the price difference.
C) sell the futures, simultaneously sell the underlying asset, and pocket the price difference.
D) buy the futures, simultaneously buy the underlying asset, and pocket the price difference.
B
You might also like to view...
An increase in the real interest rate in the United States will cause the dollar to ________ relative to other currencies and ________ net exports and real GDP
A) appreciate; increase B) appreciate; reduce C) depreciate; increase D) depreciate; reduce
Suppose a blackjack gambler approaches an insurance company and seeks to purchase an insurance policy that his next trip to Reno, NV will not net $10,000. The insurance company
A) will sell her an insurance policy because the proposal entails uncertainty not risk. B) will sell her an insurance policy because the proposal entails risk not uncertainty. C) will not sell her an insurance policy because the proposal entails uncertainty not risk. D) will not sell her an insurance policy because the proposal entails risk not uncertainty.
Deadweight loss:
A. occurs in markets that are efficient. B. occurs when markets are in equilibrium. C. is the loss in surplus from a market not in equilibrium. D. is additional surplus from an additional market transaction.
For an intertemporal budget constraint concerning saving for retirement, the choice is between present consumption and future consumption.
a. Fungible b. Utility-maximizing c. Intertemporal choice d. Backward-bending