Two-year risk-free rate in the US is 3%; the two-year risk-free rate in Canada is 5%. The current CAD/USD exchange rate is 1.05 and the observed two-year forward price is 1.12 CAD/USD, what strategy one should employ to make an arbitrage profit: A) Borrow CAD, buy USD and enter a short forward contract on USD B) Borrow CAD, buy USD and enter a short forward contract on CAD C) Borrow USD, buy CAD and enter a short forward contract on CAD D) Borrow USD, buy CAD and enter a short forward contract on USD What is the forward price on a six-month forward contract on an asset that is expected to provide income equal to 3.96% per annum (compounded continuously). The continuously rate is 4% and the asset spot price is $25. A) 28.75 B) 26.81 C) 26.55 D) 25.77 A stock is currently priced at $30 and is expected to pay a dividend of $0.30 20 days from now and a dividend of $0.50 65 days from now. The contract price for a 60- forward contract when the continuously compounded interest rate is 5% is closed to: A) 29.94 B) 29.45 C) 30.66 D) 31.22