Question
James, believes she has identified an arbitrage opportunity for a commodity as indicated by the information in the following exhibit Spot price commodity = R120.
James, believes she has identified an arbitrage opportunity for a commodity as indicated by the information in the following exhibit
Spot price commodity = R120. Futures price for commodity expiring in 1 year = R125. Interest rate for 1 year = 8 %.
Describe the transactions necessary to take advantage of this specific arbitrage opportunity and calculate the arbitrage profit.
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Fundamentals Of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
14th Edition
0135175216, 978-0135175217
