Question 2 [Forward and Spot Prices: 30%]

Assume that the underlying asset/stock is an investment asset. The information of the forward price and stock price is provided below:

Forward price	F0	$450
Stock/Spot Price	S0	$430
Maturity date of Forward Contract (1 year)	T	1
Risk-free Rate	r	4%

Question 2 - Part A [10%]

Given the above information, show that there is an Arbitrage Opportunity between the Forward price and the Spot price.

Question 2 - Part B [20%]

Construct and demonstrate the Arbitrage Strategy (i.e., Cash-and-Carry Strategy or Reverse Cash-and-Carry Strategy) based on the above information and your result in Part (A).

In addition, compute the Arbitrage Profit of this arbitrage strategy.