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question1 A 18-month forward contract on a non-dividend-paying stock is entered into when the price...

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Accounting

question1

A 18-month forward contract on a non-dividend-paying stock is entered into when the price of a stock is $35 and prevailing 18-month continuous compounding risk-free interest rate is 3%. How can an arbitrageur lock in a risk-free profit if the forward price of the stock is relatively lower by $3?

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