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Consider a stock with s0 50 that pays a dividend of 1 at

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Consider a stock with S_0 = 50 that pays a dividend of $1 at t = 1. Suppose the effective (not continuous) annual interest rate is r = 10% and the 3-year forward price is F(0,3) = 59. Construct an arbitrage strategy in this situation.

Reference no: EM13604430

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