BUG's stock price S is $50 today. It pays a dividend of $0.25 after two months and $0.30 after five months. The continuously compounded interest rate is 1.22 percent per year. If the four- month forward price is $51.49, the arbitrage profit that you can make today by trading one forward contract and other securities is: [round to two decimal places]

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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BUG's stock price S is $50 today. It pays a dividend of $0.25 after two months and $0.30 after
five months. The continuously compounded interest rate is 1.22 percent per year. If the four-
month forward price is $51.49, the arbitrage profit that you can make today by trading one
forward contract and other securities is: [round to two decimal places]
Transcribed Image Text:BUG's stock price S is $50 today. It pays a dividend of $0.25 after two months and $0.30 after five months. The continuously compounded interest rate is 1.22 percent per year. If the four- month forward price is $51.49, the arbitrage profit that you can make today by trading one forward contract and other securities is: [round to two decimal places]
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