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.)