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Suppose there is a financial asset ABC, which is the underlying asset for a futures contract with settlement six months from now. You know the following about this financial asset and the futures contract:

o In the cash market ABC is selling for $80.

o ABC pays $8 per year in two semi-annual payments of $4, and the next semi-annual payment is due exactly six months from now.

o The current six-month interest rate at which funds can be loaned or borrowed is 6%.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M953920

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