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
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Only add and change the 300 Dividend and change the arbitrage profit at $1100
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
Transcribed Image Text: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
Transcribed Image Text:$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
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