How many round trips will it take for you

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You observe that the risk-free rate in markets with a term to maturity of 21 years, r21, is1.2% per year and that the value today of $1 to be realized with certainty at t=23, DF23, is 0.792. Set up an arbitrage table assuming that you have $10,000 that you can readily lend and work out the rate at which your investment grows with each round-trip of lending and borrowing in markets with a term to maturity of 21 and 23 years.

How many round trips will it take for you to make $100,000?

Reference no: EM132585445

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