20 points) Explain what an arbitrage is. Assuming the principle of no arbitrage, give an argument to show that the futures price F for delivery at time T of a unit of a shortable financial asset A must be F = erTSo where o is the spot price today for a unit of A. (5 points extra credit) Extend this argument to the case where, over the interval 10, T], the asset provides cash income whose present value (at t 0) is I. Suppose that the asset is not shortable. Why does the same result hold in most instances? 20 points) Explain what an arbitrage is. Assuming the principle of no arbitrage, give an argument to show that the futures price F for delivery at time T of a unit of a shortable financial asset A must be F = erTSo where o is the spot price today for a unit of A. (5 points extra credit) Extend this argument to the case where, over the interval 10, T], the asset provides cash income whose present value (at t 0) is I. Suppose that the asset is not shortable. Why does the same result hold in most instances