Question: 1. Suppose that you enter into a 3-month forward contract on a non-dividend- paying stock when the stock price is $50 and the risk-free interest

1. Suppose that you enter into a 3-month forward contract on

1. Suppose that you enter into a 3-month forward contract on a non-dividend- paying stock when the stock price is $50 and the risk-free interest rate (with continuous compounding) is 10% per annum. a. What is the forward price? b. Explain the arbitrage opportunities if the forward price is $53 c. Explain the arbitrage opportunities if the forward price is $49 IS

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