A stock has a current price of EUR 90, and it pays in 2 months a dividend of EUR 4. The term structure of interest rates is flat at 4.5% (continuous compounding). How could you exploit arbitrage opportunities if a new forward contract with a maturity 6 months were offered at a forward price of 82.99?

Answer rating: 100% (QA)

To determine if theres an arbitrage opportunity we can follow these steps Calcula... View the full answer