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  3. suppose that the bid price of google stock is $497

Suppose that the bid price of Google stock is $497 per share and the ask...

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Finance

Suppose that the bid price of Google stock is $497 per share and the ask price is $501 per share. Google does not pay any dividends. Short selling the stock is feasible at zero cost. You can borrow at an annual rate of 5.3 and lend at 4.3% (simple compounding). The commission of closing a forward position is $0.7 per share. The short sell cost is $4 payable when the borrowed stock is returned. What is the highest forward price that will not allow arbitrage? Please round to two decimal places

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