Security that represents portfolio of individual stocks

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Reference no: EM131884114

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 22 sharesshares of? Hewlett-Packard (HPQ), 11 shareshare of Sears? (SHLD), and 44 shares of General Electric? (GE). Suppose the current stock prices of each individual stock are as shown? here:

Stock Current Market Price

HPQ $ 29

SHLD $35

GE $17

a. What is the price per share of the ETF in a normal? market? (round to the nearest dollar)

b. If the ETF currently trades for $143?, what arbitrage opportunity is? available? What trades would you? make? (Ignore any transaction? costs.)

c. If the EFT currently trades for $173?, what arbitrage opportunity is? available? What trades would you? make? (Ignore any transaction? costs.)

Reference no: EM131884114

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