Question: 1 . Suppose that S ( 0 ) = 1 7 rupees, F ( 0 , 1 ) = 1 8 rupees, r = 8

1. Suppose that S(0)=17 rupees, F(0,1)=18 rupees, r=8%, and short selling requires a 30%. security deposit attracting interest at d =4%.. Is there an arbitrage opportunity? Find the highest rate d for which there is no arbitrage opportunity.

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