QUESTION 15 A stock is currently priced at $40. The risk-free rate of interest is 8% p.a. compounded continuously and an 18-month maturity forward contract on the stock is currently traded in the market at $38. You suspect an arbitrage opportunity exists. Which one of the following transactions do you need to undertake at time t = 0 to arbitrage based on the given information? Long the forward, borrow money and buy the share Short the forward, short-sell the share and invest at risk-free rate Long the forward, short-sell the share and invest at risk-free rate Short the forward, borrow money and buy the share