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A stock price is $50 today. It pays dividend of $1 after two months and $1.05after five months. The continuously compounded interest rate is 4%
A stock price is $50 today. It pays dividend of $1 after two months and $1.05after five months. The continuously compounded interest rate is 4% per year.Transaction costs are $0.10 per stock traded, a $0.25 one-time fee for tradingforward contracts, and no costs for trading bonds. If the six-month forwardprice is $51, demonstrate how to make arbitrage profits or explain why you can not
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