What action would you take if the futures price given


Suppose there is a financial asset ABC, which is the underlying asset for a futures contract with settlement six months from now. You know the following about this financial asset and the futures contract: In the cash market ABC is selling for $80. ABC pays $8 per year in two semi-annual payments of $4, and the next semi-annual payment is due exactly six months from now. The current six-month interest rate at which funds can be loaned or borrowed is 6%. Respond to these questions: What is the theoretical (or equilibrium) futures price? What action would you take if the futures price is $83? What is the profit? What action would you take if the futures price is $76? What is the profit? ?

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Finance Basics: What action would you take if the futures price given
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