Question 4 (4 pts.) (1) (1 pt.) Suppose that platinum currently sells for $1,200 an ounce....

Question 4 (4 pts.)

(1) (1 pt.) Suppose that platinum currently sells for $1,200 an ounce. If the risk-free rate is 1% per year, what should be the price of a one-year maturity futures contract? (2) (1.5 pts.) Suppose the price of one-year futures contract is $1,220 instead in the previous problem, please construct an arbitrage strategy so that investors can make riskless profits. (3) (1.5 pts.) Suppose the price of one-year futures contract is $1,205 instead in the previous problem, please construct an arbitrage strategy so that investors can make riskless profits.

Expert Solution

ekkarill92 answered 1 year ago

(a) Suppose that silver currently sells for $1,200 an ounce. If the risk-free rate is 1%...

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