Business
Business, 12.02.2020 21:22, haileymaree

Suppose that the risk-free interest rate is 10% per annum with continuous compounding and that the dividend yield on a stock index is 4% per annum. The index is standing at 400, and the futures price for a contract deliverable in four months is 405. What arbitrage opportunities does this create?

please answer in your own words and step by step e. g. 1) short stock 2) invest $400 at e^(r-q)*T etc.

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