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At date t, a hedge fund notices that a banker's forward price quote for a stock is greater than the cost of carry price. The
At date t, a hedge fund notices that a banker's forward price quote for a stock is greater than the cost of carry price. The stock does not pay dividends. To earn an arbitrage profit, the hedge fund should do which of the following?
a.Short the forward, buy the stock, and borrow money.
b.Go long the forward, short the stock, and lend money.
C.Short the forward, short the stock, and lend money.
D.Go long the forward, go long the stock, and borrow money.
E.Short the forward, short the stock, and borrow money.
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