A market maker in stock index forward contracts observes a $6-$month forward price of $$116$ on the index. The index spot price is $$112$ and the continuously compounded annual dividend yield on the index is $2\%.$ The nominal risk$-$free interest rate is $10\%$ compounded semi$-$annually. Describe actions the market maker could take to exploit an arbitrage opportunity and calculate the resulting profit $($per index unit$).$

A$.$ Buy observed forward for $1$ share of the index, borrow $$112,$ short sell $1$ share of$$stock$,$ Profit $=0\mathrm{.}57$

b$.$ Buy observed forward, lend $$110\mathrm{.}89,$ short sell $0\mathrm{.}99$ share of stock, Profit $=0\mathrm{.}43$

c$.$ Buy observed forward, borrow $$110\mathrm{.}89,$ buy $0\mathrm{.}99$ share of stock, Profit $=0\mathrm{.}43$

d$.$ Sell observed forward, borrow $$112,$ buy $1$ share of stock, Profit $=0\mathrm{.}57$

e$.$ Sell observed forward, lend $$112,$ short sell $1$ share of stock, profit $=0\mathrm{.}43$

D is not the answer