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please calculate final arbitrage profit Spot price =$3.42 Theoretical future price = Spot price (1+r)2+ storage cost Theoretical future price =3.421.042+0.02=$3.72 Theoretical future price =$3.72
please calculate final arbitrage profit
Spot price =$3.42 Theoretical future price = Spot price (1+r)2+ storage cost Theoretical future price =3.421.042+0.02=$3.72 Theoretical future price =$3.72 But futures are trading at 3.52 So futures are underpriced and spot are over priced. Borrow money and buy future contract and sell in spot market. That would be arbitrage strategy. By doing this trader can earn arbitrage profit in the market. QUESTION 4 For the todibir, press ALT =F10 RCO or AIT+FN+F10 Mall Step by Step Solution
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