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Question 3 The spot price of an asset, that provides no income, is $30 and the risk-free rate for all maturities (with continuous compounding)

Question 3 The spot price of an asset, that provides no income, is $30 and the risk-free rate for all maturities (with continuous compounding) is 10%. (a) What is the three-year forward price? (b) Suppose the market quoted forward price is $44. Is there an arbitrage opportunity? (c) Show using a payoff Table the transactions you would undertake and the amount of arbitrage profits earned.

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