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You Lend $200 at 8% Per Year for Three Months

Question 23

Multiple Choice

You lend $200 at 8% per year for three months and proceed to short sell Asset XYZ for $200 in the cash market. You are required to pay $6 to the lender of Asset XYZ (which is the proceeds the lender would have received) . You then immediately buy a futures contract at $184 for delivery of asset XYZ in three months (this will cover your short position) . What is the net profit or loss from your strategy of lending money, short selling, and buying the futures contract?


A) $14
B) $10
C) -$7
D) -$14

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