3. Seaboard Corp stock is selling for 1799.20 and pays a $15 dividend in three months and again in six months. (a) (5 points) What is the no-arbitrage price of a five-month forward contract if interest rates are 11%? (b) (5 points) Suppose the forward contract is priced at $1,885.00 Is there an arbitrage opportunity? If so, conduct an arbitrage showing all steps. What is your profit on this arbitrage? (c) (5 points) Suppose the forward market price was $1,860.94. What would be your arbitrage profit? (show all steps of the arbitrage). (d) (5 points) Suppose you originally entered into a short forward position in Seaboard Corp stock at $1,870.00. In two months the spot price of the shares changes to $1,850. What is the value of your short forward position? (e) (5 points) What would be the value of your position if this were a futures contract? 2. What is the no-arbitrage price today of a risk-free bond with remaining term of 8 years, $1000 face-value and 4% coupon rate, if coupon payments are made twice a year, and a coupon was just paid yesterday? 3. What is the YTM of the bond from Q2, in percentage terms? Be extra precise. 4. Assume now that the bond from Q2 is risky, with a rating of A, and that the credit spread for bonds rated A is currently constant at 1% for all terms. What is the no-arbitrage price of the bond today? Suppose the current stock price of the Walt Disney Company is $50 and you can enter a forward contract (long or short position) to buy 50'000 stocks in 9 months for $51 each. The Walt Disney stock is expected to increase to $53 in 9 months. The 9-month (risk free) spot rate is 3% (c.c.). (a) Is there an arbitrage if Walt Disney does not pay dividends? If so, carefully describe a possible arbitrage strategy. What should the forward price be in a world without arbitrage? (b) Suppose the 3-month (risk free) spot rate is 2.75%. Is there an arbitrage if Walt Disney pays a dividend of $0.75 in 3 months? If so, carefully describe a possible arbitrage strategy. What should the forward price be in a world without arbitrage?