Emma and Robert are discussing an investment opportunity about the stock XYZ. The stock has a current price of 100 and the forward price for delivery of this stock in 1 year is 110. The annual effective risk-free interest rate is 5%. This stock currently pays no dividends. Read the following discussions about the contract. Do you support them or not? Justify your answers.

i. Emma argues that investing in XYZ stock versus investing in the forward contract does not provide a comparative advantage.

ii. Robert says that he has read about rumours of a dividend of 3.5 to be paid on this stock, 6 months from now. If true, he is arguing that it would be more beneficial to invest in the forward contract, rather than investing in the stock.

iii. Emma argues that investing in the forward contract would be more advantageous than investing in the stock only if the 5% interest rate is not annual effective but continuously compounded.