CFA Level I sample question

CFA Level I Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives question

Derivatives / Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives

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Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives sample question

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Derivatives

Arbitrage, Replication, and the Cost of Carry in Pricing Derivatives

The spot price of a storable industrial metal is USD 40.00 per unit. Storage and insurance costs of USD 2.00 per unit are payable at the end of one year, the annual risk-free rate is 5.0% with annual compounding, and holding the metal provides no convenience yield or other benefits. The no-arbitrage price of a one-year forward contract on the metal is closest to:

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