How can arbitrage opportunities appear when dealing with financial derivatives?
In finance, the market efficiency establishes that market prices should not allow for the possibility of riskless profit or arbitrage in the absence of transaction costs. Which of the following sentences do NOT represent a clear situation of arbitrage with derivatives? a) Two assets with identical future cash flows trade at different prices. b) An
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What are the main operational advantages of derivatives compared to stop markets?
Derivative transactions offer a number of operational advantages to cash or spot markets in many instances. Which of the following sentences better reflects these operational advantages of financial derivatives? a) Lower transaction costs, lower upfront cash requirement, leverage, and short positions. b) Lower risk, higher performance, leverage, and short positions. c) Lower transaction costs, lower
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