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ABC pays a continuously compounding dividend and is priced at 120. The dividend yield is 4% and the risk-free continuously compounding interest rate is 6%.

ABC pays a continuously compounding dividend and is priced at 120. The dividend yield is 4% and the risk-free continuously compounding interest rate is 6%. Explain what you could do to arbitrage a 1Y forward price of 121 and what your profit would be.

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