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The current price of a stock is $80 per share. The risk-free rate of interest...

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Finance

The current price of a stock is $80 per share. The risk-free rate of interest is 4% per annum compounded continuously, and a two-year forward contract written on the stock has a forward delivery market price of $90. The firm is expected to pay no dividends over the next few years, and assume zero transaction costs. Which of the following statement is most likely true?

A.To arbitrage, today you need to short the forward, buy the stock and invest at risk-free rate B.To arbitrage, today you need to long the forward, buy the stock and borrow at risk-free rate C.To arbitrage, today you need to long the forward, buy the stock and invest at risk-free rate D.To arbitrage, today you need to short the forward, buy the stock and borrow at risk-free rate E.To arbitrage, today you need to short the forward, short-sell the stock and invest at risk-free rate F.To arbitrage, today you need to long the forward, short-sell the stock and invest at risk-free rate

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