An Attempt to Exploit Differences Between the Prices of a Stock

question 53

Multiple Choice

An attempt to exploit differences between the prices of a stock index futures contract and the prices of the underlying stocks is known as:

• A) index programming.
• B) arbitrage speculation.
• C) index arbitrage.
• D) program speculation.

---

Definitions:

BMWs

A brand of luxury vehicles produced by the German company Bayerische Motoren Werke AG, known for high performance and quality.

Reservation Price

The maximum price a consumer is willing to pay for a good or service, beyond which they would choose not to purchase it.

BMWs

Refers to vehicles manufactured by Bayerische Motoren Werke AG, a German multinational company known for producing luxury vehicles and motorcycles.

Utility Function

A mathematical representation of a consumer's preference ranking for bundles of goods, showing the level of satisfaction derived from each bundle.