Question: F 0,T = S 0 e (r+ c)t 1. Solve for Forward Price given: S 0 = 10, t=4, r= .075 = .055 c= 0

F0,T = S0e (r+ c)t

1. Solve for Forward Price given:

S0= 10, t=4, r= .075 = .055 c= 0

2. Solve for Forward Price in same problem if c=0.02

3. Using your answer in question 2 if the forward price (F0,T)=12, is there an arbitrage opportunity? If so, how can you take advantage of it?

Answer all three. :)

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