The current value of digital stock is 44 per share. you are, Ask an Expert

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Provide a short justification for your answers (you are evaluated on the justification)

The current price of Digital stock is $44 a share. You are offered a forward price for Digital stock to be delivered in one year of $42. The forward price is lower than the spot price because the market anticipates a sharp decline in the price of Digital stock, and the contract offers a way to hedge this risk. There is no arbitrage opportunity.

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