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Suppose that currently the bid and ask prices of a stock are $100 and $101, respectively. You are the market make for this stock's futures
Suppose that currently the bid and ask prices of a stock are $100 and $101, respectively. You are the market make for this stock's futures contract. Assume investors, including you, with best credit standing can borrow at 6% and invest in risk-free bond at 5%. You are pricing for your 1-year futures contract. Which of the following is false? Your bid-ask spread should be less than $3. Your bid-ask spread cannot be more $2. Your bid price should be more than $105. Your ask price should be less than $108
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