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You are given that the current price of Chraszczyszyce stock at the Warsaw Stock Exchange is 500 Polish zloties (PLN) per share. The nine-month forward price is 552 PLN per share. Chraszczyszyce will pay a dividend of 25 PLN in a year. The risk-free rate is 4% per annum continuously compounded. Determine if there is an arbitrage opportunity based on the prices given, and if there is one, find the amount of profit that can be realized by taking advantage of it, valued at the end of the year, per share of Chraszczyszyce. Assume that there are no taxes, no expenses to trading, and you can borrow and lend at the risk-free rate.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92408434

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