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QUESTION 3 Suppose that the risk-free interest rate is 10% per annum with continuous compounding and that the dividend yield on a stock index is

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QUESTION 3 Suppose that the risk-free interest rate is 10% per annum with continuous compounding and that the dividend yield on a stock index is 4% per annum. The index is standing at 500, and the futures price for a contract deliverable in five months is 515. What arbitrage opportunities does this create? 3 (12pt) T. TTTT Paragraph Arial %DOQ O fx Mashups 16 Ulm . Words:0 Pathp

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