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Suppose that the risk free annual effective rate of interest is 5%. A stock is currently trading for $45.34 per share. This stock is expected to pay a dividend of $1.20 per share six months from now. The price of a nine month forward contract on one share of this stock is $47.56. Is there an arbitrage opportunity on the forward contract? If so, describe the strategy to realize profit and find the arbitrage profit.

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Category:- Basic Finance
Reference No.:- M9868910

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