If the margin account paid interest at the risk free rate

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Reference no: EM131325892

Suppose that a futures margin account pays interest but at a rate that is less than the risk-free rate. Consider a trader who buys the asset and sells a futures to form a risk-free hedge.

Would the trader believe the futures price should be lower or higher than if the margin account paid interest at the risk-free rate?

Reference no: EM131325892

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