Problem 1. (Arbitrage, 9') Two parties enter a stock forward at time t=0 that expires at t=T. The underlying stock pays a stream of dividends at a known and constant dividend yield . The risk-free rate is a known constant r. Use continuous compounding. (b) The no-arbitrage forward price is F0,T=S0e(r)T. Show the arbitrage tables (cash flow tables for the arbitrage strategies) when the forward is overpriced or underpriced, respectively. (6') Problem 1. (Arbitrage, 9') Two parties enter a stock forward at time t=0 that expires at t=T. The underlying stock pays a stream of dividends at a known and constant dividend yield . The risk-free rate is a known constant r. Use continuous compounding. (b) The no-arbitrage forward price is F0,T=S0e(r)T. Show the arbitrage tables (cash flow tables for the arbitrage strategies) when the forward is overpriced or underpriced, respectively. (6')