Exercise 4. An investor comes to you believing she has identified an arbitrage opportunity for a stock as indicated by the following information: Stock spot price $120 Dividend paid in 1 year Futures price for stock expiring in 1 year $125 Interest rate for 1 year 8% $3 Explain what in the theory we studied fails so that the arbitrage opportunity arises. Describe the transactions necessary to take advantage of this arbitrage opportunity. Calculate the arbitrage profit