Exists for boeing stock and single-stock futures contracts

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Reference no: EM131552723

Suppose that an arbitrage opportunity exists for Boeing stock and single-stock futures contracts. The risk-free arbitrage strategy is to sell Boeing stock short, invest the proceeds at the risk-free rate, and enter a long position in Boeing single-stock futures. As arbitrageurs execute this strategy, what effect will their actions have on prices?

a) Spot price of Boeing stock will fall and futures price of Boeing futures will fall until the arbitrage opportunity vanishes.

b) Spot price of Boeing stock will fall and futures price of Boeing futures will rise until the arbitrage opportunity vanishes.

c) Spot price of Boeing stock will rise and futures price of Boeing futures will fall until the arbitrage opportunity vanishes.

d) Spot price of Boeing stock will rise and futures price of Boeing futures will rise until the arbitrage opportunity vanishes.

Reference no: EM131552723

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