Programmed trading (index arbitrage)transfers changes in the futures markets to the stock markets.

Question

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Programmed trading, particularly index arbitrage, involves buying or selling a basket of stocks to profit from price differences between the stock index futures and the actual stock index. This process naturally transfers changes in futures markets to the stock markets as traders adjust their positions to exploit these differences.

Programmed Trading (Index Arbitrage)transfers Changes in the Futures Markets to the Stock