Multiple Choice
The spot price trades at the following bid/ask quote: 100-101 . If the simple interest rate for one year is 2%, which of the following statements is most accurate?
A) You can execute an arbitrage by buying spot and selling forward.
B) You can execute an arbitrage by selling spot and buying forward.
C) You can execute an arbitrage by selling spot, buying forward, and investing the proceeds of the spot sale at 2%.
D) You cannot execute an arbitrage at these prices.
Correct Answer:
Verified
Correct Answer:
Verified
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