Finance-pricing forwards and futures | Finance 560 | Colorado State University–Global Campus

Finance-pricing forwards and futures | Finance 560 | Colorado State University–Global Campus

 

Option #1: Pricing Forwards and Futures

Respond to the following questions.

  1. Suppose there is an active lease market for gold in which arbitrageurs can short or lend out gold at a lease rate of 1%. Assume gold has no other costs/benefits of carry. Consider a three-month forward contract on gold.
    1. If the spot price of gold is $360/oz and the three-month interest rate is 4%, what is the arbitrage-free forward price of gold?
    2. Suppose the actual forward price is given to be $366/oz. Is there an arbitrage opportunity? If so, how can it be exploited?
  2. A three-month forward contract on a non-dividend-paying asset is trading at $95, while the spot price is $82.
    1. Calculate the implied repo rate.
    2. Suppose it is possible for you to borrow at 8% for three months. Does this give rise to any arbitrage opportunities? Why or why not?

Complete your response in 2-4 pages using Microsoft Word or Excel. For calculations, you must show work to receive credit. Your well-written response should be formatted according to CSU-Global Guide to Writing and APA Requirements (Links to an external site.)Links to an external site., with any sources properly cited. Upload your completed work to the Week 3 Assignments page.

Order Now For this paper or similar assignments,
Trust us today & live to tell a success tale of best grades & plagiarsim free work!!

ABOUT US

We are an online study help firm providing a platform for students to get writing help from professionals at affordable price. We adhere to academic set standards in colleges and univerities in the world. All our papers are 100% plagairsim free

OUR SERVICES

  • Custom Writing
  • Paper Editing
  • Proofreading
  • Resume Writing
  • CopyWriting
  • Homework Writing

CONTACT INFO

[email protected] or [email protected]

+1 (346) 249-0805

Copyright © Essaycola.com 2020 All Rights Reserved

It's a lifetime discount time!
15% off
Save this discount code:
essaycola15
WhatsApp chat