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a 3 month forward contract on a non-dividend paying asset is trading at 90 and spot price is 87. a) calculate the implied risk free
a 3 month forward contract on a non-dividend paying asset is trading at 90 and spot price is 87.
a) calculate the implied risk free rate.
b) you can borrow at 13% pa cont. compounded for hree months . list the step to be taken to exploit this situation.
c) compute the risk free profit in part b
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