Which One of the Following Exploits Differences Between Actual Future

question 72

Multiple Choice

Which one of the following exploits differences between actual future prices and their theoretically correct parity values?

• A) Index arbitrage
• B) Marking to market
• C) Reversing trades
• D) Settlement transactions

---

Definitions:

Payoff

The return or reward received from an investment or action.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal given the strategies of all other players, leading to a situation where no player can benefit by changing strategies unilaterally.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player, regardless of what strategies other players choose.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal, given the strategies of other players, and no player has an incentive to deviate unilaterally.