***This is from Investment and Financial Mathematics (IFM) course for Actuaries. Please give handwritten solution...
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***This is from Investment and Financial Mathematics (IFM) course for Actuaries. Please give handwritten solution with ALL steps shown. I will give "thumbs-up" for clear and correct solution. Thanks in advance!***
The ABC stock has a spot price of So = 1,000. The continuous interest rate and dividend yield are r = 0.04 and 8 = 0, respectively. You observe a 6 month forward price of 1,050. What arbitrage profit can be made in 6 months? (Answer: 29.80)
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