The spot price of a certain asset is S0 = $50400 And the price for a six months maturity future over such underlying asset is F= $53550

a) Compute the risk free rate (continuous compounding).

b) Combine the spot and the future markets so as to replicate debt. Your wealth is $ 50,400,000, show two strategies that:

Invest purchasing both, the underlying asset and bonds.

Invest purchasing only the underlying asset and borrowing money.

(Hint: File called Options & Futures by Alejandro Balbs will help you).