You borrow $200 at 10% per year and proceed to buy Asset XYZ for $200 in the cash market. This asset pays $5 quarterly. You then immediately sell a futures contract at $214 requiring delivery of asset XYZ in three months. Which of the below statements is TRUE?
A) At the end of three month, the settlement of the futures contract generates a total proceeds of $220.
B) At the end of three month, the cost of the loan generates a total outlay of $206
C) Your strategy of selling the futures contract after borrowing money to buy the asset produces a net profit of $15.
D) None of these
Correct Answer:
Verified
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Q7: You borrow $5,000 at 8% per year
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Q9: Which of the below statements is FALSE?
A)
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