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Question 20 1 Point The market price of a $100 one-year zero is $95. Meanwhile, a one-year fixed-term bank account offers an interest rate of
Question 20 1 Point The market price of a $100 one-year zero is $95. Meanwhile, a one-year fixed-term bank account offers an interest rate of 7% per year. Assuming that the two instruments carry the same risk, are there any unexploited arbitrage opportunities? A Yes, an investor could make risk-free gains by closing the bank account and purchasing the zero B No, there are no arbitrage opportunities between these two investments C) Yes, an investor could make risk-free gains by selling the zero and placing the money in the bank account No, the arbitrage principle ensures that the market is in equilibrium
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