The price of a stock is $75 today, and the continuously compounded interest rate is 8 % per annum. If the 9-month forward price of this asset is $78.33, there are arbitrage opportunities. To realize an arbitrage profit today, _______ the forward contract, _______one share of the stock, and make a borrowing or invest (whichever is appropriate) of _______, and make an arbitrage profit of ________ today.

Select one:

a.buy, buy, $75.8344, $1.3077

b.buy, short sell, $73.768, $1.2315

c.sell, short sell, $75.8344, $1.3077

d.sell, buy, $73.768, $1.2315

e.sell, buy, $75.8344, $1.3077

The current stock price is $50, and the continuously compounded interest rate is 12% per annum. The stock is going to provide a dividend of $2.50 after 9 months. If the 1-year forward price of this stock is $56, there are arbitrage opportunities. The arbitrage profit that can be made today by trading in one forward contract is:

Select one:

a.$2.1153

b.$1.6523

c.$2.0976

d.$1.9823

e.$1.9523

It is May and a company knows that it will require 20,000 barrels of crude oil in November. It decides to trade December oil futures, whose current price is $41.00 per barrel. One oil futures contract is for delivery of 1,000 barrels. In November, when the company closes its December futures position, the spot price is $42 and the futures price is $44. What is the effective price per barrel paid by the company after taking into account the gains or losses in the futures market?

Select one:

a.$38

b.$40

c.$39

d.$41

e.None of the above