Answer: no risk and no net investment.

**Explanation:** In arbitrage pricing theory (APT), an arbitrage opportunity exists when a trader can earn a positive net profit with: - **No risk**: The position should be risk-free, meaning the outcome is certain regardless of market movements - **No net investment**: The trader doesn't need to commit any capital upfront This is the fundamental definition of pure arbitrage - earning risk-free profits without any initial investment. Option A correctly captures both conditions, while options B and C violate one of these essential requirements.

Author: LeetQuiz Editorial Team