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irakobra [83]
2 years ago
12

A three-month forward contract on a stock index is trading at $1000. The current index level is $985.1. Assuming a continuously

compounded interest rate of 5%. Additionally, assume that the stock index does not pay any dividends. Which one of the following statements reflects a potential arbitrage strategy:
I. Long the forward contract, short the stock index, and lend at the risk-free rate
II. Short the stock index and lend at the risk-free rate, while entering in a forward contract agree- ment to purchase the asset in three months for $1000.
(a) I alone
(b) II alone
(c) I and II
(d) None of the above
Business
1 answer:
timofeeve [1]2 years ago
4 0

Answer:

d

Explanation:

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Discuss how firms can benefit from (1) related diversification and also can benefit from (2) unrelated diversification. Discuss
igor_vitrenko [27]

Answer:

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