If the Implied Repo Rate Is Lower Than the Borrowing $R_b$

If the implied repo rate is lower than the borrowing rate $R_b$ and the lending rate $R_{\ell}$ for the same maturity,what strategy would you adopt to undertake an arbitrage?

A) Buy the asset spot,sell it forward,lend at rate $R_{\ell}$

B) Buy the asset spot,sell it forward,borrow at rate $R_b$

C) Sell the asset spot,buy it forward,lend at rate $R_{\ell}$

D) Sell the asset spot,buy it forward,borrow at rate $R_b$

Correct Answer:

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