# explain Index Arbitrage, what conditions must exist and how profits are earned through the strategy. To be awarded the most points, a numerical…

explain Index Arbitrage, what conditions must exist and how profits are earned through the strategy. To be awarded the most points, a numerical example should be devised that supports your answer.

Define and explain Index Arbitrage:

a. F<=Se^(r-q)(T-t)

b. F>=Se^(r-q)(T-t)

Use S0 = 1500, ST = 1500, r = 0.05, q = 0, T =1, and F = 1550 for scenario a, and F = 1600 for scenario b.

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explain Index Arbitrage, what conditions must exist and how profits are earned through the strategy. To be awarded the most points, a numerical… was first posted on September 17, 2020 at 2:41 am.