Today: | Short sell index | ❘ at $10,000 | Buy futures contract | | at $9,500 | Invest proceeds | I | $10,000 @ 9% | After 1 Year: | Investment matures | | to $10,900 | Futures contract matures | ❘ at $9,500 | Buy index | ❘ at $9,500 | Profit | | $1,400 $12,000 ARBITRAGE OPPORTUNITY $10,000 $9,500 $8,000 $6,000 $4,000 $2,000 Arbitrage Opportunity $10,900 $1,400 $0 one year futuresp rice Value of interest Series arbitrage profit
Today: | Short sell index | ❘ at $10,000 | Buy futures contract | | at $9,500 | Invest proceeds | I | $10,000 @ 9% | After 1 Year: | Investment matures | | to $10,900 | Futures contract matures | ❘ at $9,500 | Buy index | ❘ at $9,500 | Profit | | $1,400 $12,000 ARBITRAGE OPPORTUNITY $10,000 $9,500 $8,000 $6,000 $4,000 $2,000 Arbitrage Opportunity $10,900 $1,400 $0 one year futuresp rice Value of interest Series arbitrage profit
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Only add and change the 300
Dividend and change the arbitrage profit at $1100
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