Question: 4. Define position limits and exercise limits. What is the purpose of designating these limits? What risk does an exchange face with these limits? 5.

4. Define position limits and exercise limits. What is the purpose of designating these limits? What risk does an exchange face with these limits? 5. Mention an example when a longer European call is less valuable than a shorter European call. (ONE SENTENCE ONLY) 6. Design an arbitrage strategy with example when a futures contract is overvalued. 7. What risk is there for holding onto a futures position in the delivery month? How does a trader minimize this risk

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