________ is the strategy for earning risk-free profits by taking advantage of any unusual differences between spot and futures price.
A) Program trading
B) Arbitrage
C) Inverted trading
D) A basis sale
E) Hedging

Question

Quizplus · Accepted Answer

Arbitrage is the strategy for earning risk-free profits by taking advantage of any unusual differences between spot and futures price. Program trading refers to the large-scale trading of a portfolio of stocks to take advantage of market inefficiencies. Inverted trading is not a commonly used term in finance. A basis sale refers to selling a commodity at the spot price while buying a futures contract at a lower price, which is similar to hedging. However, it does not necessarily result in risk-free profits like arbitrage does. Hedging refers to the practice of reducing or transferring risk.

________ Is the Strategy for Earning Risk-Free Profits by Taking