Question 2. No-Arbitrage Determination of Forward Price [20%]

The information of the forward price and stock price is provided below:

Forward price	F0	$567
Stock/Spot Price	S0	$485
Maturity date of Forward Contract (3 years)	T	3
Risk-free Rate	r	5%

Step (1) Using the information above and applying the Cost-of-Carry Model, verify if there is an arbitrage opportunity.

[in your answers, show all steps/formula, calculation, and result as clearly as possible]

Step (2) In addition, clearly explain and illustrate the arbitrage ("Cash-and-Carry" or "Reverse Cash-and-Carry") strategy and compute the arbitrage profit.

[in your answers, show all steps/formula, calculation, and result as clearly as possible]