× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
g
3
3
2
J
2
p
2
m
2
h
2
s
2
r
2
d
2
l
2
a
2
New Topic  
Memphic Memphic
wrote...
Posts: 728
Rep: 0 0
6 years ago
If the ETF is currently trading for $1200, what arbitrage opportunity is available? What trades would you make?
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 66 times
1 Reply

Related Topics

Replies
wrote...
6 years ago
The ETF is underpriced. Therefore an arbitrage opportunity exists by shorting the individual stocks and longing the ETF. Sell or Short two shares of APPL, one share of GOOG, and ten shares of MSFT and buy one share of the ETF.

Price = 2 × $200.23 + 1 × $570.51 + 10 × $29.61 = $1267.07
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  1092 People Browsing
 125 Signed Up Today
Related Images
  
 862
  
 338
  
 388
Your Opinion
Which of the following is the best resource to supplement your studies:
Votes: 249