Question
question1 A 18-month forward contract on a non-dividend-paying stock is entered into when the price of a stock is $35 and prevailing 18-month continuous compounding
question1
A 18-month forward contract on a non-dividend-paying stock is entered into when the price of a stock is $35 and prevailing 18-month continuous compounding risk-free interest rate is 3%. How can an arbitrageur lock in a risk-free profit if the forward price of the stock is relatively lower by $3?
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Financial Accounting
Authors: Thomas Dyckman, Robert Magee, Glenn Pfeiffer
3rd Edition
1934319600, 978-1934319604
