1year futures on Sony is currently selling for $34 ; the spot price of SONY stock is $30 .

1year futures on Dell is currently selling for $62; the spot price of DELL stock is $60 .

Sony is expected to pay a $1 dividend in 6 months and DELL is expected to pay a $2 dividend in 6 months. The 6 month and 12 month spot interest rates are 10% (continuously compounded). Each futures contract is for the delivery of one stock. a) Explain how you can make an arbitrage profit by taking a position in one futures contract on Sony.

Calculate the amount of the arbitrage profit. b) Explain how you can make an arbitrage profit by taking a position in one futures contract on Dell. Calculate the amount of the arbitrage profit c) Assume that you can implement only one arbitrage strategy.You have to pay a $1 fee per share that is sold short. The fee has to be paid when the stock is returned to its owner. Which of the two arbitrage strategies will make you more money?