Enter spread position but had no current liquidity

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Reference no: EM132018199

If you were a portfolio manager with a bullish view of the market and wanted to enter a spread position but had no current liquidity, would you be more likely to use calls or puts? Why?

The Black-Scholes-Merton formula requires a number of restrictive assumptions, including log-normality of the underlying asset’s value. By contrast, the pricing of futures and forwards requires relatively few assumptions. List the key assumptions necessary in calculating the price and value of futures contracts?

Reference no: EM132018199

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