Question
a.) When you use cost of carry model, are you using fundamental analysis or technical analysis? b.)Suppose you find the following: FMKT=1300; FTRUE= 1295 using
a.) When you use cost of carry model, are you using fundamental analysis or technical analysis?
b.)Suppose you find the following: FMKT=1300; FTRUE= 1295 using Cost of Carry. Is market making an error?
c.) Is market over valuing, fair valuing or under valuing the futures?
d.)Is this sustainable? Give reason.
e.) Describe the actions of arbitrage, if any, to make the market fair.
f.)What is the maximum profit to arbitrage?
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Millon Cornett
9th edition
1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772
