You are an authorized market participant of the QQQ ETF (Nasdaq 100 ETF). The current best bid and ask prices of QQQ are $318.82 and $319.12, respectively. You can buy one basket of securities underlying one QQQ for $318.80 and sell this basket for $318.70. Based on this information, you have decided to conduct an arbitrage using market orders. What is the maximum profit you can make for a trading block of 200,000 QQQ ETF shares, assuming that you can buy and sell this amount at the best bid and ask prices?

a.

$800

b.

$4,000

c.

$400

d.

$8,000

The healthcare sector has an average P/E ratio of 38.84. Pfizer is expected to pay an annual dividend per share of $1.20. Pfizer pays out 45% of its earnings as dividends. Based on the given information, the fair price of its stock calculated using the relative valuation approach is:

a.

Not enough information to determine

b.

$84.74

c.

$103.57

d.

$47.25