Appeared on June 1, 2009
Dow Jones announced that Cisco and Travelers will be replacing GM and Citigroup on the Dow as of next week. As of late this morning, the two new components are both up over 4 percent. Often when a company is added to a major index, it sees a lift in its share price both from the publicity as well as from the need for tracking funds to buy the new components. But is there an arbitrage play to profit even more? Eliezer Fich, Ph.D., associate professor of finance at Drexel University's LeBow College of Business, says he believes there is.