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Suppose our underlying is a stock XYZ. Today (t=0), XYZ is priced at $1000. The storage and insurance cost is $100, paid in advance. The

Suppose our underlying is a stock XYZ. Today (t=0), XYZ is priced at $1000. The storage and insurance cost is $100, paid in advance. The forward contract uses XYZ as the underlying, Suppose the interest rate is 10%. The forward price at today (t=0) is $1100. What is the arbitrage profit that you can make today based on cost-of-carry model?

$100

$1100

Unlimited

No arbitrage opportunity

Cannot determine

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