Explain the difference between the spot and forward markets


1. Describe an arbitrage CDO. Explain what a credit enhancer is and how it works.

2. Explain the difference between the spot and forward markets. Give an example when someone may wish to use the spot market; to use the forward market.

3. Alisha can afford car payments of $264 a month for 60 months. The bank will lend her money to buy a car at 6% APR compounded monthly (0.5% per month). How much money can he afford to borrow?

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Financial Management: Explain the difference between the spot and forward markets
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