1. Consider a single-stock futures contract on Apple stock. Consider the following scenario:

• Annualized, continuously compounded risk-free interest rate for 2-month period: r = 2.95%.
• Annualized, continuously compounded risk-free interest rate for 4-month period: r = 5.65%.
• Current spot price of Apple stock: $562 per share.
• Dividend per share of $0.62 in 2 months.
• Contract expiration: T = 4 months.
• Futures price on Apple single-stock futures: $600 per share.

An arbitrage opportunity exists. What is the net profit per share when the futures contract expires? Use a strategy that has zero netcash flows today and zero net cash flows in two months.

2. Consider a single-stock futures contract on Exxon-Mobil stock. Consider the following scenario:

• Annualized, continuously compounded risk-free interest rate for 3-month period: r = 3.16%.
• Annualized, continuously compounded risk-free interest rate for 5-month period: r = 5.21%.
• Current spot price of Exxon Mobil stock: $154 per share.
• Dividend per share of $0.64 in 3 months.
• Contract expiration: T = 5 months.
• Futures price on Exxon Mobil single-stock futures: $150 per share.

An arbitrage opportunity exists. What is the net profit per share when the futures contract expires? Use a strategy that has zero net cash flows today.

3. Suppose that an Intel single-stock futures contract expires in four months. The stock pays a dividend in two months. We have the following information.

• Annualized, continuously compounded risk-free interest rate for 2-month period: r = 3.86%.
• Annualized, continuously compounded risk-free interest rate for 4-month period: r = 4.95%.
• Current spot price of Intel stock: $30 per share.
• Dividend per share of $0.24 in two months.

What must the futures price equal in order than no arbitrage opportunity exist?

4. The spot price of an investment asset is $47 per unit and the annualized risk-free rate for all maturities (with continuous compounding) is 6%. The asset provides an income of $1.68 per unit at the end of the first and second years. Assuming no arbitrage opportunities exist, what is the forward price on a forward contract that matures in 3 years?