Question
Let F_0 be the future price of gold, r_f = 10% be the 1 year risk-free rate, s_0 = 1200 be the spot price of
Let F_0 be the future price of gold, r_f = 10% be the 1 year risk-free rate, s_0 = 1200 be the spot price of gold, and T=1 year be the time period.
a. what is the future price F_0 of gold?
b. if someone offer you F_0= 1400, how can you take advantage of the invorrect price to profit?
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Financial Management Concepts and Applications
Authors: Stephen Foerster
1st edition
013293664X, 978-0132936644
