a Arbitrage is a key concept in financial mathematics. In this project, you are expected to consider some financial trading opportunities and identify, from the given data set, a mispricing that can lead in turn to an arbitrage opportunity. Then you will have to report a corresponding arbitrage strategy for returning a risk-free profit and estimate the magnitude for the expected profit, both in written and in oral form. 3 Data A trader has access to the following four investment opportunities. One of them features a significant misprice that needs to be identified. Once identified, an arbitrage strategy can be devised to make a risk-free profit (see below for further guidance). The trader also has access to bonds at the UK market interest rate at 0.67%. Opportunity 2: Futures for stocks with dividend Futures are similar to forward contracts. However, futures are traded on an exchange. As- sume that fair futures prices are equal to forward prices (see lecture notes Secs 4.8 and 4.9). The following financial data for the supermarket sector was available on 1 February 2021. The fair strike price for futures contracts is given for delivery of shares on 1 September 2021. All prices are given in GBX (pence). Share Value Dividend Payment date Futures Tesco 224.41 1.75 1 May 222.53 Sainsbury's 299.24 0.75 1 March 299.66 Morrisons 234.33 1.25 1 June 234.00