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Question
A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year risk-free rate is 3.25%.
Based on the above data, which of the following sets of transactions will yield positive riskless arbitrage profits?
A. Buy oil in the spot market with borrowed money, and sell the futures contract.
B. Buy the futures contract, and sell the oil spot and invest the money earned.
C. Buy the oil spot with borrowed money, and buy the futures contract.
D. Buy the futures contract, and buy the oil spot using borrowed money.
Answer
This answer is hidden. It contains 1 characters.
Related questions
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Q:
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D. The answer cannot be determined from the information given.