Construct an arbitrage example involving an asset

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Reference no: EM131324138

Describe two problems in using the Black option on futures pricing model for pricing options on Eurodollar futures ?

Explain why the Black option on futures pricing model is simply a pricing model for options on instruments with a zero cost of carry?

Construct an arbitrage example involving an asset that can be sold short, and use it to explain the cost of carry model for pricing futures.

Reference no: EM131324138

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