Limit order book is formed by limit orders, because limit ordersareLiquidity providerLiquidity demander...

Limit order book is formed by limit orders, because limit orders are

Liquidity provider
		Liquidity demander
		Both liquidity provider and demander
		None of the above are correct

If the cost of carry is less than the convenience yield, the seller of the future contract should deliver as early as possible

true or false

Making profit by taking no risk is a risk-free arbitrage opportunity.

true or false

Solutions

Expert Solution

1. B) BOTH LIQUIDITY PROVIDER AND DEMANDER

2. FALSE

If the cost of carry is less than the convenience yield, the seller of the future contract should deliver as LATE as possible

3.FALSE

The truth however is that arbitrage funds are not risk-free. Where does the risk lie? Well, factors like the availability of arbitrage opportunities, their 'perfect' execution and also the liquidity in the stock/cash and futures segments are some of the factors that contribute to the uncertainty, and therefore risk, with respect to this investment avenue.

jeff jeffy answered 2 years ago

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