RB_CH02_Q058. Long foreign stock rising no insider
difficulty ·answer type: strategy·✓Not solved
Problem
You have inside information that a foreign stock will rise for sure. You can legally trade in the foreign market without being subject to any insider trading rules. You can trade the stock, a forward on the stock, futures on the stock, or options on the stock. Assume interest rates are zero, there are no transactions costs, the exchange rate will not move, and there are no restrictions on trading the derivatives. What trade should you put on if you can only go long these instruments?
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