4. Suppose the Spot Price of an asset is $40; It produces an Income of $1; Interest is 6%;

*** ONLY do A or B below depending on your First name. dont do both

(For students with First Name starting from A . L (only do PART A below)

a. Is there Arbitrage if 9 months forward price is $42; If yes, what strategy will you adopt and how much is the profit? (Please show all calculations as in the class example)

(For students with First Name starting from M. W (only do PART B below)

b. Is there Arbitrage if 4 months forward price is $38; If yes, what strategy will you adopt and how much is the profit? (Please show all calculations as in the class example)