A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year

Fantastic news! We've Found the answer you've been seeking!

Question:

A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year risk-free rate is 3.25%. The arbitrage profit implied by these prices is .

A. $6.50;

B. $5.44;

C. $4.29;

D. $3.2S;

E. $2.71

Related Book For answer-question

Essentials of Investments

ISBN: 978-0078034695

9th edition

Authors: Zvi Bodie, Alex Kane, Alan Marcus

See More Books

Posted Date: Aug 10, 2019 08:47 AM

See More Questions

A one-year gold futures contract is selling for $1,141. Spot gold prices are $1,200 and the one-year risk-free rate is 2%. a. According to spot-futures parity, what should be the futures price? b....
A one-year gold futures contract is selling for $1,641. Spot gold prices are $1,700 and the one-year risk-free rate is 2%. What arbitrage opportunity is available to investors? What strategy should...
What is the shear capacity of the RC beam described below considering the steel reinforcement and using the formula: VRsyAw 2fyd cot 8/s The shear reinforcement in the beam is provided by sets of...
3. Show how accounts receivable will appear on the December 31, 2023, balance sheet. Assets Current assets: Partial Balance Sheet Accounts receivable Less: Allowance for doubtful accounts 22,525
Refer to TELUS's financial statements in Appendix A at the end of the book to answer the following questions. Show amounts in millions. 1. Three important pieces of inventory information are (a) the...
Tonya Latirno is a staff accountant for Cannally and Kennedy, a local CPA firm. For the past 10 years, the firm has given employees a year-end bonus equal to two weeks' salary. On November 15, the...
On February 16, 2005, Joseph and Margaret Buset borrowed $192,000 from Fremont Investment & Loan (the Originator). The loan was secured by a mortgage on a residential condominium. The mortgage named...
On July 1, a city issued, at par, $100 million in 6 percent, 20-year general obligation bonds. It established a debt service fund to account for resources set aside to pay interest and principal on...
data in Range N 6 : Y 4 3 describes NFL quarterback ( QB ) statistics for the 2 0 1 3 season. Write different formulas for the following questions. Name Team G QBRat Comp Att Pct Yds Y / G Y / A TD...
. With the information generated from the following table derivate from the Bureau of Economic Analysis (https://apps.bea.gov/iTable/index_nipa.cfm), please do the regression analysis, with the...
The Achyboi Candies manufacturer of chewing gum, uses a standard cost system. Standard product and cost specifications for 1,000 lbs of chewing gum are as follows: Gumbase Corn Syrup Sugar Quantity...
You have $35,000 in a brokerage account and you plan to deposit $3,250 at the end of every future year until your account reaches $250,000. How many years will it take reach your goal if you expect...
TUNXI COMMUNITY COLLEGE Principles of Marketing Frontier Air Lines Case Study DUE DATE: November 22.2022 Please Cite Sources. Section | A description of the company Include a mission statement and...
Project S has a cost of $15,000 and is expected to produce benefits (cash flows) of $3,000 per year for 6 years. Calculate the project's Net Present Value (NPV) assuming a cost of capital of 15%.
help me to fill the TODO sections just write the code ... public void addStudentData () { /* TODO: get the values from the textfields */ String studIdS = studId.getText () .trim () ; String...
Consider a time in your professional history when an evidence-based change was being implemented in your workplace. What role did you play as a stakeholder? Were you provided with the evidence behind...
2022 MFJ, husband age 47 W2: $90K/$9185 tax withheld, wife 45, housewife, not a business person, paints as a hobby and sold a painting for $3K and had the following expenses: supplies: $800 and small...
Explain the buyers position in a typical negotiation for a business. Explain the sellers position. What tips would you offer a buyer about to begin negotiating the purchase of a business?
Why does a progressive tax code produce a retirement annuity for a middle-class household that is similar to that which would follow from a flat tax?
Assume expected returns and standard deviations for all securities, as well as the risk-free rate for lending and borrowing, are known. Will investors arrive at the same optimal risky portfolio?...
Using Spreadsheet 21.10, assess the present value of a 1% increase in college tuition as a fraction of the present value of labor income.
Use the Internet to access Home Depot's most recent annual report. a. What evidence did you find that Home Depot continues to rely on present worth analysis in its corporate decision making? b. Does...
Use an Internet search engine to identify three companies or agencies that use present worth analysis to make business decisions as evidenced in their annual reports.
Use the Internet to access ConocoPhillips's most recent annual report. a. What evidence do you find that ConocoPhillips continues to rely on present worth analysis in its corporate decision making?...

A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year

Question:

Expert Answer:

Option c 429 is correct The strategy is loan an amount equal to spot price and ... View the full answer

Essentials of Investments

Students also viewed these corporate finance questions