5. You were told in Problem 4 that the price of CERE is $22.59/share. Remember that CERE doesn't pay dividends. Suppose there were a forward contract on CERE maturing in 6 months and with a forward price of $23.20. The 6-month t-bill rate is 5%. a) What is the synthetic repo rate implied by the spot and forward prices for CERE? b) Is there an arbitrage? If so, how would you exploit it? c) If you implemented this arbitrage using 1000 shares of CERE, what would your profits look like?

5. You were told in Problem 4 that the price of CERE is $22.59/ share. Remember that CERE doesn't pay dividends. Suppose there were a forward contract on CERE maturing in 6 months and with a forward price of $23.20. The 6-month tobill rate is 5%. a) What is the synthetic repo rate implied by the spot and forward prices for CERE? b) Is there an arbitrage? If so, how would you exploit it? c) If you implemented this arbitrage using 1000 shares of CERE, what would your profits look like