From the list below, choose two conditions that must be met in order to execute an arbitrage transaction. Select one or more: U a. There is insufficient market depth on both legs • b. Transaction fees exist, but do not exhaust arbitrage profit • c. Minimum trade size exceeds current market depth • d. An arbitrage pricing window exists • e. Transaction fees exceed the arbitrage pricing window

Which of the following does not describe an aspect of an arbitrage trade?A.Is riskless. B.Requires an initial investment. C.Requires no initial outlay of capital. D.Makes a profit.

Which of the following is inconsistent with the notion that there are no arbitrage opportunities?Question 1Select one:Investment strategy A is very safe. No matters what happens, it will generate a guaranteed payoff at time T of $100.In contrast, the future payoff to investment strategy B is highly uncertain -- it could be high or low. Nevertheless, strategy B has an expected payoff is $100. Since A and B both have expected payoffs of $100, the cost to enter both strategies today must also be identical.The future payoff to an investment strategy is known today with complete certainty. Therefore, the spot price to enter this strategy today will be such that whoever enters today will earn the riskfree rate of interest over the investment horizon.Investment strategy A always generates the same future payoff as investment strategy B. It follows that the current price to enter A must be identical to the current price to enter B.An investment product is structured such that its payoff at future time T is guaranteed to be $0. It follows that the current price to enter this strategy must also be $0.All of the above are consistent with the notion that there are no arbitrage opportunities.

Arbitrage

Foreign exchange market arbitrageurs:a.try to outsmart the market in an effort to gain profits.b.require foreign currency to purchase foreign goods.c.profit on the minor discrepancies that appear between marketplaces.d.they profit from the difference in exchange rates between the bid and offer.

Which of the following conditions would most likely support market-penetration pricing?a.The product's quality and image must support the price.b.Production and distribution costs rise as sales volume increases.c.The low price does not affect the competition.d.A low price does not affect market growth.e.The market must be highly price sensitive