Which one of the following is the strategy of earning risk-free profits by taking advantage of any unusual differences between cash and futures prices?
A)cash-futures arbitrage
B)mark to market
C)margin calling
D)basis recognition
E)cash spotting

Question

Quizplus · Accepted Answer

Cash-futures arbitrage is a strategy of earning risk-free profits by taking advantage of any unusual differences between cash and futures prices. This involves buying an asset in the cash market and selling a futures contract simultaneously or vice versa, with the aim of profiting from the price difference between the two markets. Mark to market, margin calling, basis recognition, and cash spotting do not involve arbitrage strategies.

Which One of the Following Is the Strategy of Earning