Problem

22. Stock ABC is trading spot at a price of 40. The one-year forward quote for the stock i...

22. Stock ABC is trading spot at a price of 40. The one-year forward quote for the stock is also 40. If the one-year interest rate is 4% and the borrowing cost for the stock is 2%, show how to construct a risk-less arbitrage in this stock.

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Solutions For Problems in Chapter 4