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Barb the CEO of ST Ltd wants to set up a new arbitrage department within ST Ltd, and needs your help. She wants to know

Barb the CEO of ST Ltd wants to set up a new arbitrage department within ST Ltd, and needs your help. She wants to know how to earn arbitrage profits. Given the following information, advise Barb on the mispricing of the following futures contract and how an arbitrage strategy could be implemented. Be sure to draw a table outlining the initial and terminal values of your strategy: (8 marks) A share SA is currently selling for $32.67 on the ASX; A 6-month futures contract on SA is traded with a futures price of $33.82 per share; The risk-free rate of interest is 6% p.a. compounded weekly; and, Shares in SA are currently paying a dividend yield of 4% p.a. compounded semiannually.

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