Question
Suppose the implied repo rate is r and you can lend at a rate r l > r . Then you can create an arbitrage
Suppose the implied repo rate is r and you can lend at a rate rl > r . Then you can create an arbitrage by synthetically borrowing at the rate r and lending at rl by ________ the forward contract, _________ the spot, and lending.
Group of answer choices
buying; selling
selling; buying
selling; selling
buying; buying
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Risk Management And Financial Institutions
Authors: John C Hull
6th Edition
1119932483, 9781119932482
