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(b) An asset currently has a price of 10. Suppose that six-months future prices of: (i) (ii) 11 10.10 are available. If the risk free

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(b) An asset currently has a price of 10. Suppose that six-months future prices of: (i) (ii) 11 10.10 are available. If the risk free rate is r = 6%, show that a risk-free profit can be made in both cases. [6]

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