(Answered) Assume that the gama index spot price is at 12000 the risk

Finance

Assume that the gama index spot price is at 12,000, the risk free rate is 3% and the continuous dividend yield on the index is 0%. suppose you observe a 18-month forward price of 14,000

a) What arbitrage would you take?

b) What is the profit on your arbitrage strategy?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92777171
Price:- $10

Verified Expert

Priced at $20 Now at $10, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Basic Finance

1 what special problem do off-balance-sheet activities

1. What special problem do off-balance-sheet activities present to bank regulations? (200words) 2. With respect to off-balance-sheet activities, what have bank regulator done about it? (200words)

What is the yield to maturity ytm on a 5-year 1000 bond

What is the yield to maturity (YTM) on a 5-year, $1,000 bond that pays annual payments of $100 that has a current value of $1,112? (rounded to 2-digits)

What are the possible downsides of momentum investing is it

What are the possible downsides of momentum investing? Is it worth it do utilise this approach?

What are the ways that it can help comply with legal

What are the ways that IT can help comply with legal requirements and social responsibilities surrounding the sales of alcohol?

Portfolio part - case studychoose a hospitality company and

Portfolio Part - Case Study Choose a hospitality company and prepare an analytical & comparative case study of investing potential in the common stock this company over three years (2015, 2016, 2017). Your report should ...

Walmart has issued a dividend for the past five years in

Walmart has issued a dividend for the past five years. In 2013 it issued a $1.00 dividend. This year it is expected to issue a $1.50 annual dividend. Please calculate the rate the dividend has grown (two decimals please)

Question during 2014 its first year of operations as a

Question: During 2014, its first year of operations as a delivery service, Loonie Corp. entered into the following transactions. 1. Issued shares of common stock to investors in exchange for $80,000 in cash. 2. Borrowed ...

What type of data values are quantitative and the number of

What type of data values are quantitative and the number of values is finite or countable?

A firm is considering the two mutually exclusive

A firm is considering the two mutually exclusive investments projects. Project Alpha requires an initial outlay of $600 and will return $160 per year for the next seven years; Project Beta requires an initial outlay of $ ...

You have just leased a car that has monthly payments of 365

You have just leased a car that has monthly payments of $365 for the next 4 years with the first payment due today. If the APR is 6.84 percent compounded monthly, what is the value of the payments today? $13,979.07 $15,3 ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert