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Discuss about the arbitrage opportunity

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Reference no: EM131637927

Question: Suppose that S(0) = 17 dollars, F(0, 1) = 18 dollars, r = 8%, and short selling requires a 30% security deposit attracting interest at d = 4%. Is there an arbitrage opportunity? Find the highest rate d for which there is no arbitrage opportunity.

Reference no: EM131637927

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