easy · Market Microstructure Limit Order Book & Order Routing
An Authorized Participant (AP) notices an S&P 500 ETF is trading at 450.50 per share, while the net asset value (NAV) of the underlying basket of 500 stocks is exactly 450.00.
To profit from this 10 basis point premium, the AP should:
- Sell the underlying stocks and buy the ETF
- Buy the ETF shares and hold them for the dividend
- Buy the underlying stocks and create new ETF shares
- Sell the underlying stocks and redeem ETF shares
Sign up free to see the explanation and track your rank →
More Market Microstructure Limit Order Book & Order Routing practice
- A stock is quoted at $50.00 bid x $50.10 ask. A buyer… How does this action affect the…
- If the stock price drops instantly from $50.05 to $49.00 in a 'flash crash,' what happens…
- Under the National Market System (Reg NMS), if Exchange A is quoting a stock at $10.00 x…
- If a market sell order for 200 shares arrives at 10:00:05 AM, who receives the fill?
- A stock is trading with an NBBO of $40.00 × $40.10. A trade… According to the Lee–Ready…
- What is the status of our limit order after the match, and what microstructure risk is…
- A stock is priced at $1.05. A market participant submits a… Why is this quote rejected…
- If a market buy for 400 shares arrives and the exchange uses 'pro-rata' matching, how…
All Limit Order Book & Order Routing questions · Market Microstructure study guide · Market Microstructure glossary · Market Microstructure flashcards