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Consider a stock whose price on 1 January is 120 rupees and which will pay...

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Finance

Consider a stock whose price on 1 January is 120 rupees and which will pay a dividend of I rupee on I July 2000 and 2 rumpees on 1 October 2000. The interest rate is 12%. Is there an arbitrage opportunity if on I January 2000 the forward price for delivery of the stock on 1 November 2000 is 131 rupees? If so, compute the arbitrage profit.

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