a. Explain why restrictions on short selling of stocks would cause the actual price of a stock
Question:
a. Explain why restrictions on short selling of stocks would cause the actual price of a stock index futures contract to diverge from its theoretical price.
b. Explain why creating a portfolio of stocks in which the number of stocks is less than the number of stocks in the index underlying a stock index futures contract would result in an arbitrage that is not riskless.
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Related Book For 
Foundations Of Financial Markets And Institutions
ISBN: 9780136135319
4th Edition
Authors: Frank J Fabozzi, Franco G Modigliani, Frank J Jones
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