The big decline in share prices on the New York Stock Exchange that occurred in October 1987
A)was almost entirely attributable to the effects of index arbitrage.
B)occurred despite the complete ban on index arbitrage in existence at the time.
C)was not mainly the result of index arbitrage.
D)was made less severe than it might have been because of the effects of index arbitrage.

Question

Quizplus · Accepted Answer

While index arbitrage was a contributing factor to the decline, it was not the main cause. Other factors such as high interest rates, international events, and overvaluation of stocks also played a role.

The Big Decline in Share Prices on the New York