ippose that the bid price of Google stock is $499 per share and the ask price is $502 per share. Google does not pay any
ippose that the bid price of Google stock is $499 per share and the ask price is $502 per share. Google does not pay any dividends. Short selling the tock is feasible at zero cost. You can borrow at an annual rate of 5.8 and lend at 4.1% (simple compounding). The commission of closing a forward position 51.5 per share. What is the highest forward price that will not allow arbitrage? Please round to two decimal places. 532.62 margin of error +/0.1 The upper limit of the no-arbitrage window depends on transaction costs involved in arbitraging over-priced forward contracts Step by Step Solution
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Authors: Peter S Kaufman, Henry F Owsley
2nd Edition
1587983044, 978-1587983047
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