The current price of a stock is $41 and the stock is expected to pay a dividend of $0.25 in four months time. The risk-free rate of return is 5.00% p.a. (continuously compounded). If the price on a six month forward contract is F0,0.5 = $40, is there an arbitrage opportunity? What is the no-arbitrage price of the forward contract? If arbitrage is possible, design a strategy to take advantage of it. What is the arbitrage profit earned from this strategy?