Calculate the implied repo rate

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Reference no: EM132069795

Please help by answering the following questions. Please show any work necessary and provide detailed reasonings.

A three-month forward contract on a non-dividend-paying asset is trading at $95, while the spot price is $82.

a. Calculate the implied repo rate.

b. Suppose it is possible for you to borrow at 8% for three months. Does this give rise to any arbitrage opportunities? Why or why not?

Reference no: EM132069795

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