Arbitrage opportunies. Suppose that: The spot price of a non-dividend-paying stock is $10 The 6-month forward price

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Arbitrage opportunies.

Suppose that:

The spot price of a non-dividend-paying stock is $10

The 6-month forward price is $12

The 6-month US$ interest rate is 5% per annum

Is there an arbitrage opportunity?

TIPS: present a table at time To (now) and T(in 6 months) to explain the arbitrage strategy and sum up all the cash flows to determine the profit of the arbitrage.

please provide with explained answer with APA references .

Posted Date: May 19, 2024 08:07 PM

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Arbitrage opportunies. Suppose that: The spot price of a non-dividend-paying stock is $10 The 6-month forward price

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