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Suppose that the risk-free interest rate is 10% per annum with continuous compounding and that...

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Finance

Suppose that the risk-free interest rate is 10% per annum with continuous compounding and that the dividend yield on a stock index is 5% per annum. The index is standing at 420, and the futures price for a contract deliverable in one year is 390. What arbitrage opportunities does this create?

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