Derivatives Q45

45Analyst 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?

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

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