3. It is mid-June 2021, and you are managing a portfolio of Japanese stocks that is benchmarked to the Nikkei 225 Index. You are concerned the Japanese stock market is heading for a downward correction and you decide to sell futures contracts on this index. You collect the following information: Nikkei 225 Index (latest quote): JPY 28,386 Trailing 12-month P/E ratio: 28.60 Trailing 12-month dividends: JPY 506 Forward 12-month P/E ratio (est.): 18.68 Forward 12-month dividends (est.): JPY 554 | 3 Months -.11% .04% Government Yield Japan United States 6 months -.10% .04% 12 months -.13% .06% a) Using this information, calculate the fair value of the December 2021 Nikkei 225 futures contract. b) If the actual December 2021 Nikkei 225 futures contract was quoted at JPY 28,350, would you be inclined to buy it or sell it assuming you did not want to hedge? Describe the steps you would take to construct an arbitrage position (6 points)