a) The current price of a stock is $35 and the stock is expected to pay a dividend of $0.25 in four months' time. The risk-free rate of return is 5.00% p.a. (continuously compounded). If the price on a six month forward contract is F0.0.5 = $32, is there an arbitrage opportunity? What is the no-arbitrage price of the forward contract? If arbitrage is possible, design a strategy to take advantage of it. What is the arbitrage profit earned from this strategy? b) Your stock portfolio is currently worth $50 million and has a beta of 0.9. If you took a long position in 94 S&P200 futures contracts quoted at Fo1 = 4,300 (with nominal value of F0,7 X $25), what would be the overall beta of your combined stock and futures portfolio? What might be your motivation for taking this long position and how would your returns differ relative to purchasing the shares in the S&P200 Index