To trade in stocks, a brokerage commission of 1% of the stock price is charged. However, if you buy the stock and later sell it, or you short sell the stock and later buy, assume that you pay the brokerage commission only one time at the beginning. If the stock price is $75 and the continuously compounded interest rate is 5%, what is arbitrage-free price range of the nine-month forward price?
A. $76.15 and $77.24
B. $76.89 and $78.84
C. $77.08 and $78.64
D. $77.62 and $78.94
E. None of the above
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To trade in stocks, a brokerage commission of 1% of the stock price is charged. However, if you buy the stock and later sell it, or you short sell the stock and later buy, assume that you pay the brokerage commission only one time at the beginning. If the