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  • Quiz 4

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    Aarham Aziz
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    This document contains details of two quizzes taking place on 19 September 2023 at 1 PM and 2:30 PM. The quizzes include questions about arbitrage opportunities and the law of one price. Specifically, they ask about the two situations where arbitrage exists, how to make an arbitrage profit from a forward contract priced at 109, and the implications of violating the law of one price through a forward contract priced at 113.

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    This document contains details of two quizzes taking place on 19 September 2023 at 1 PM and 2:30 PM. The quizzes include questions about arbitrage opportunities and the law of one price. Specifically, they ask about the two situations where arbitrage exists, how to make an arbitrage profit from a forward contract priced at 109, and the implications of violating the law of one price through a forward contract priced at 113.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views5 pages

    Quiz 4

    Uploaded by

    Aarham Aziz
    This document contains details of two quizzes taking place on 19 September 2023 at 1 PM and 2:30 PM. The quizzes include questions about arbitrage opportunities and the law of one price. Specifically, they ask about the two situations where arbitrage exists, how to make an arbitrage profit from a forward contract priced at 109, and the implications of violating the law of one price through a forward contract priced at 113.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 5

    Quiz 4 – 1 PM

    19 Sep 2023
    1. What are the two situations in which an arbitrage opportunity
    exists?

    2. An asset has a current spot price of 100. There are no cash flows
    associated with this asset. The risk-free rate is 10%. Jon is willing
    to engage with you in a one-year forward contract at 109. What
    steps must you take now and at the end of the year to make an
    arbitrage profit?
    Quiz 4 – 2:30 PM
    19 Sep 2023
    1. What is the law of one price? What happens if this law is violated?

    2. An asset has a current spot price of 100. There are no cash flows
    associated with this asset. The risk-free rate is 10%. Jon is willing
    to engage with you in a one-year forward contract at 113. What
    steps must you take now and at the end of the year to make an
    arbitrage profit?

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