Which one of the following terms is defined as the strategy of monitoring the futures price on a stock index in relation to the value of the underlying index to profit from any parity deviations?
A)parity trading
B)index trading
C)program monitoring
D)inverted arbitrage
E)index arbitrage

Question

Quizplus · Accepted Answer

Index arbitrage involves monitoring the futures price on a stock index in relation to the value of the underlying index to profit from any parity deviations. Parity trading refers to the strategy of profiting from price discrepancies between two related financial instruments, and index trading refers to buying and selling securities based on the movements of an underlying index without necessarily engaging in arbitrage. Program monitoring and inverted arbitrage are not relevant to this concept.

Which One of the Following Terms Is Defined as the Strategy