A brokerage commission of 1% of the stock price is charged for stock trading.However, if you buy
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Question:
A brokerage commission of 1% of the stock price is charged for stock trading. However, if you buy the stock and then sell it, or if you short the stock and then buy it, let's say you only pay brokerage commission once at the beginning. If the stock price is $75 and the continuous compounding rate is 5%, what is the no-arbitrage price range of the nine-month futures price?
In the above problem, if the brokerage commission is 1.25%, what is the nine-month futures price range?
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