An attempt to exploit the differences between the prices of a stock index future and the prices of a stock index is known as:
A)index programming.
B)arbitrage speculation.
C)index arbitrage.
D)program speculation.

Question

Quizplus · Accepted Answer

Index arbitrage is the act of exploiting price differences between a stock index future and the underlying stocks in the index. This strategy involves buying or selling a basket of individual stocks while taking a simultaneous opposite position in the index futures contract to take advantage of price discrepancies. Therefore, option C is the correct answer. Choices A, B, and D are incorrect as they do not accurately describe this strategy.

An Attempt to Exploit the Differences Between the Prices of a Stock