Question: 8. You are given: S = 125, r = 6%, 8 = 3%, T = 1. Joe observes a one year forward price of 126

8. You are given: S = 125, r = 6%, 8 = 3%, T = 1. Joe observes a one year forward price of 126 in the market. He enters a long position in a forward contract to buy one share of the stock and shorts one share of the stock. Show that Joe's portfolio is not an arbitrage hs portfolio. (6 points)

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