box spread comment, profit, should

joehogue

R42 P.432 example10

value of the box spread:X2-X1=10
cost of the box spread:9.20
profit:10-9.20=0.80

the box spread should be worth (X2-X1)/(1+r)^t=9.75

The answer says, "The box spread is UNDERPRICED."

Why underpriced? not OVERPRICED?

Any comment is appreciated..

Iginla2011

Wait what? The price is less than the value. Therefore it is under priced. Is there something I am missing?

cityboy

cost is less than value -- so underpriced

mp3bu

thanks all !!!

former

Box spread? Sounds like sexy time.

mcmc

pinkman, yeah, you better think twice when you see it on 5th June