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1. Suppose you buy a one-year forward contract at $65. At expiration, the spot price is $73. The risk-free rate is 10 percent. What is

1. Suppose you buy a one-year forward contract at $65. At expiration, the spot price is $73. The risk-free rate is 10 percent. What is the value of the contract at expiration?

A.$8.00

B.-$8.00

C.$0.00

D.$7.27

E.none of the above

2. Futures prices differ from spot prices by which one of the following factors?

A.the systematic risk

B.the cost of carry

C.the spread

D.the risk premium

E.none of the above

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