Design an arbitrage transaction for the issuer

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Question - A forward contract calls for delivery of one Alpha stock 3 months from now. The current market price of one Alpha stock is £40. The price of the forward contract is £45, and the risk-free rate is 3% per annum. Design an arbitrage transaction for the issuer of a forward contract, using one contract. Make sure you list all the steps and the associated cash flows.

Reference no: EM133249381

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