Question
6. LOL is a new ETF that gives exposure to the Canadian wireless providers Bell (BCE), Rogers (RCI.B), TELUS (T). Trading in LOL shares remains
6. LOL is a new ETF that gives exposure to the Canadian wireless providers Bell (BCE), Rogers (RCI.B), TELUS (T). Trading in LOL shares remains slightly inefficient. Each share of the ETF is constructed to represent 0.3 BCE, 0.3 RCI.B, and 0.4 T shares. Use the following prices to describe an arbitrage opportunity, BCE = 59.24 RCI.B = 66.90 T = 45.02 LOL = 56.00 a. Buy 3 BCE, 3 RCI.B and 4 T and sell 10 LOL. Keep $2.50 b. Sell 3 BCE, 3 RCI.B and 4 T and buy 10 LOL. Keep $1.50 c. Sell 3 BCE, 3 RCI.B and 4 T and buy 10 LOL. Keep $2.50 d. Buy 3 BCE, 3 RCI.B and 4 T and sell 10 LOL. Keep $1.50
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