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Calculate the arbitrage profit

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The current stock price is $50, and the continuously compounded interest rate is 12% per annum. The stock is going to provide a dividend of $2.50 after 9 months. If the 1-year forward price of this stock is $56, there are arbitrage opportunities. What is the arbitrage profit that can be made today by trading in one forward contract ?

Reference no: EM132686998

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