Question: An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio
An exchange traded fund (ETF) is a security that represents a portfolio of individual stocks. Consider an ETF for which each share represents a portfolio of two shares of International Business Machines (IBM), three shares of Merck (MRK), and three shares of Citigroup Inc. (C). Suppose the current market price of each individual stock are shown below: Stock Current Price IBM $128.92 MRK $71.75 C $64.62 Suppose that the ETF is trading for $666.95; you should: Group of answer choices sell the EFT and buy 2 shares of IBM, 3 shares of MRK, and 3 shares of C. sell the EFT and buy 3 shares of IBM, 2 shares of MRK, and 3 shares of C. buy the EFT and sell 2 shares of IBM, 3 shares of MRK, and 3 shares of C. do nothing, no arbitrage opportunity exists
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