Tesla (TSLA) is currently trading at So = $273/share. A dealer is offering a 3-month forward...
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Tesla (TSLA) is currently trading at So = $273/share. A dealer is offering a 3-month forward at a price of F = $275/share. One TSLA futures contract is for 100 shares. Assume the interest rate is r = 1.5% p.a. You have no money or financial assets today. However, using your knowledge of forward pricing, you realize you can make an arbitrage profit given this dealer's price! (Assume no margin costs or storage costs.) (b) Name the strategy we discussed in this class to make a riskless profit. Clearly show each transaction you must make, both today and at time T, to make a riskless profit. (b) (c) What is your profit per share? What is your total profit in dollars, assuming you only use I forward contract? Tesla (TSLA) is currently trading at So = $273/share. A dealer is offering a 3-month forward at a price of F = $275/share. One TSLA futures contract is for 100 shares. Assume the interest rate is r = 1.5% p.a. You have no money or financial assets today. However, using your knowledge of forward pricing, you realize you can make an arbitrage profit given this dealer's price! (Assume no margin costs or storage costs.) (b) Name the strategy we discussed in this class to make a riskless profit. Clearly show each transaction you must make, both today and at time T, to make a riskless profit. (b) (c) What is your profit per share? What is your total profit in dollars, assuming you only use I forward contract?
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Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
Posted Date:
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