Assume (FT2 = FT1 (1 + TIT2) + T1CT2 is the equilibrium situation.Also assume that T2- T1 is one year, that T1CT2 = $1 and that TirT2 = 10%.%3DAssume the initial prices are FOT1 = 100 & FOT2 = 133.A trader goes long the FT1 contract and short the FT2 contract believing these are not equilibrium prices and that he will profitwhen they adjust to equilibrium.Say the next day, t+ 1, the t+1FT1 price moves to 115 and t+1FT2 adjusts to an equilibrium price.If the trader round trips his positions on day t+1, what is his profit or loss on the FT2 position?profit of 11loss of 11cannot be determined from the information givenprofit of 5.5

Assume tFT2 = tFT1 (1+ T1T2) + T1CT2 equilibrit Also assume that T2-T1 is one year, that T1CT2 = $1 and that TIT2 = 10%. Assume the initial prices are F0T1 = 100 & FOT2 = 133. A trader goes long the FT1 contract and short the FT2 contract believing these are not equilibrium prices and that he will profin when they adjust to equilibrium. Say the next day, t+ 1, the t+1FT1 price moves to 115 and 141FT2 adjusts to an equilibrium price. If the trader round trips his positions on day t+1, what is his profit or loss on the FT2 position? profit of 11 loss of 11 cannot be determined from the information given O profit of 5.5

Assume tFT2 = tFT1 (1+ T1T2) + T1CT2 equilibrit Also assume that T2-T1 is one year, that T1CT2 = $1 and that TIT2 = 10%. Assume the initial prices are F0T1 = 100 & FOT2 = 133. A trader goes long the FT1 contract and short the FT2 contract believing these are not equilibrium prices and that he will profin when they adjust to equilibrium. Say the next day, t+ 1, the t+1FT1 price moves to 115 and 141FT2 adjusts to an equilibrium price. If the trader round trips his positions on day t+1, what is his profit or loss on the FT2 position? profit of 11 loss of 11 cannot be determined from the information given O profit of 5.5

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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Differential Equations

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Assume (FT2 = FT1 (1 + TIT2) + T1CT2 is the equilibrium situation.
Also assume that T2- T1 is one year, that T1CT2 = $1 and that TirT2 = 10%.
%3D
Assume the initial prices are FOT1 = 100 & FOT2 = 133.
A trader goes long the FT1 contract and short the FT2 contract believing these are not equilibrium prices and that he will profit
when they adjust to equilibrium.
Say the next day, t+ 1, the t+1FT1 price moves to 115 and t+1FT2 adjusts to an equilibrium price.
If the trader round trips his positions on day t+1, what is his profit or loss on the FT2 position?
profit of 11
loss of 11
cannot be determined from the information given
profit of 5.5

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