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Basic Question 1 of 10
Assume the risk-free rate is 5%. The current price of gold is $300 per ounce and the forward price of gold is $315 in one year's time. If you want to replicate a long forward position, you would ______.
B. short sell gold now at $300, deposit the money in the bank at 5% and buy it back in one year at $315
C. short sell gold and deposit the money in the bank at 5%
A. borrow money to buy gold at $300 now
B. short sell gold now at $300, deposit the money in the bank at 5% and buy it back in one year at $315
C. short sell gold and deposit the money in the bank at 5%
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe the carry forward model without underlying cashflows and with underlying cashflows;
CFA® 2025 Level II Curriculum, Volume 5, Module 31.