- 1 Being An Astute Investor You Observe Today That The Spot Price Of An Asset A Is S 10 While The Forward Price F O 1 (54.25 KiB) Viewed 66 times
1. Being an astute investor you observe today, that the spot price of an asset A is S = £10, while the forward price F o
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1. Being an astute investor you observe today, that the spot price of an asset A is S = £10, while the forward price F o
1. Being an astute investor you observe today, that the spot price of an asset A is S = £10, while the forward price F of the asset A for delivery tomorrow is F = £9. You decide to exploit this arbitrage opportunity. Starting from zero capital, please explain in detail what steps you take: a. today (3 marks) b. tomorrow (3 marks) to obtain a profit from this market situation. Assume that all transactions involve no risk, that the asset A pays no dividend and that cash pays no interest. Total 6 marks for question 1