Consider a price-weighted index (I) and a synthetic index constructed from the constituent stocks (S). The current level of I is 10,000 and the price of S is $10,000. A forward contract on I mature after six months. The continuously compounded interest rate is 5% per year. Stocks constituting S are expected to pay $190 of dividends this year. If a dealer quoted a forward price $10,231 for S, can you arbitrage this quote? If so, how would you do so and what would your arbitrage profits be? PLEASE USE A FORMULA FROM THE SCREENSHOT & SHOW WORK

L = Lo - (1 + 5)m (1) m 11 Ls = Loe (2) Margin Buy MV A - Loan MVA (3) MVA - Loan Margin Short = Loan (4) F = Soert (5) V = S- Fer(1-1) (6) Fnear = F distanze Tnear-Taistand) (7) F = Soel(+9)-(8+y)]T (8) (9) noas q= PASAF foar 1 D = - X- P i=1 72 t: x CF xe-rxt, (10) Vs = PVFloat - PVFix (11) LT, = Loc"Ty-T2 (12) LT, = (Lo . e"; 11). e(FT3-11)-(Ta-Ti) (13) (14) ", - . FT2-T1 = T2 - T Notionalx (Reference Rate-fFRA)Time Period (15) is = 1-BN B1 + B2 + .. + BN (16)