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which one is the correct answer to this? Use the information for the question(s) below. An exchange traded fund (ETF) is a security that represents
which one is the correct answer to this?
Use the information for the question(s) below. An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of 2 shares of International Business Machines (IBM), 3 shares of Merck (MRK), and 3 shares of Citigroup Inc. (C). Suppose the current market price of each individual stock is shown below: Stock Current Price IBM MRK $40 $75 $92 Suppose that the ETF is trading for $561.00. Assuming there are no transaction costs and no taxes, what arbitrage opportunity is available? O Buy the ETF and sell 2 shares of IBM, 3 shares of MRK, and 3 shares of C. O Buy the ETF and sell 3 shares of IBM, 2 shares of MRK, and 3 shares of C. No arbitrage opportunity exists. O Sell the ETF and buy 2 shares of IBM, 3 shares of MRK, and 3 shares of C. O Sell the ETF and buy 3 shares of IBM, 2 shares of MRK, and 3 shares of CStep by Step Solution
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