Is there an arbitrage opportunity here

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An 8-month forward contract on a stock is currently priced at $84. The stock currently sells for $80. Assume that the risk-free rate of interest (with continuous compounding) is 10% per annum. Assume that dividends of $0.90 per share are expected after 4 months and 6 months.

- Is there an arbitrage opportunity here?

- If so, how can you engage in a trading strategy to exploit this opportunity? What is the profit from this trading strategy?

 

Reference no: EM13255886

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