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You observe the following information on a stock: The spot price of a non - dividend - paying stock is $ 5 4 The 6
You observe the following information on a stock:
The spot price of a nondividendpaying stock is $
The month forward price is $
The month US$ interest rate is per annum continuously compounded
a Is there an arbitrage opportunity? If there is construct an arbitrage transaction and show the net cash flows.
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