Consider the "reverse cash and carry trade" where you buy the futures contract, short sell Asset XYZ, and invest or lend at a rate of r until the settlement date. In computing the "profit," which of the below statements is TRUE?
A) Profit = Total proceeds + Total outlay
B) Profit = P - rP + (F - yP)
C) Profit = Total outlay Profit - Total proceeds
D) Profit = P + rP - (F + yP)
Correct Answer:
Verified
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