(1) Jay has just learned about derivatives and in particular, how they can be used to conduct arbitrage. Using the Cost of Carry model, he computed that the correct price for FBM KLCI futures should be 1,578.5 points. Meanwhile, the corresponding FBM KLCI futures contract is currently priced at 1,580 points. To carry out the arbitrage strategy, Jay decides to long the futures contract and simultaneously short the spot KLCI. Comment on this strategy. (a) Jay determined that the difference between the (correct) theoretical futures price and the observed futures price in the market is only very small, about 0.5 points. He still insists on carrying out an arbitrage strategy. What advice would you offer Jay