Derivatives Q45

0. Analyst 1: An arbitrage is an opportunity to make a profit at no risk and with the investment of no capital.
Analyst 2: An arbitrage is an opportunity to earn a return in excess of the return appropriate for the risk assumed.
Which analyst’s statement is most likely correct?

Answer
Comment
Array

Option : A
Explanation : Arbitrage is risk-free and requires no capital because selling the overpriced asset produces the funds to buy the underpriced asset.

Forgot your password?

I agree with the Terms.