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T a. What is arbitrage? (2 marks) b. There is an arbitrage opportunity. Process this arbitrage and calculate the arbitrage return. (5 marks) (Hints: consider

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a. What is arbitrage? (2 marks) b. There is an arbitrage opportunity. Process this arbitrage and calculate the arbitrage return. (5 marks) (Hints: consider to structure a new portfolio with other portfolios) c. If the maximum value allowed in short is $2 million, what is the possible maximum profit to be earned in the arbitrage? (2 marks)

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