A 1-Year Oil Futures Contract Is Selling for $74

question 10

Multiple Choice

A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year risk-free rate is 3.25%.
Based on the above data, which of the following sets of transactions will yield positive riskless arbitrage profits?

• A) Buy oil in the spot market with borrowed money, and sell the futures contract.
• B) Buy the futures contract, and sell the oil spot and invest the money earned.
• C) Buy the oil spot with borrowed money, and buy the futures contract.
• D) Buy the futures contract, and buy the oil spot using borrowed money.

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Definitions:

Cultural Conflict

A clash of different ways of life, values, or traditions between groups of people.

Oppressed Workers

Individuals who are subject to unfair treatment, exploitation, and inadequate working conditions by their employers or the socioeconomic system.

Ethnography

A qualitative research method focused on the systematic study of people and cultures from the insider perspective.

Phenomenological Approach

A method in social science that focuses on the subjective experience of individuals, emphasizing personal perception and meaning as the primary source of knowledge.