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Explain arbitrage opportunity

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Reference no: EM132932873

Question 1)

Guru Sharman claims that he can travel in time. At the same time, you know that Guru is a greedy capitalist and Guru loves having more money. Show how Guru can get rich by doing some arbitrage

Question 2)

Suppose the S&P500 index is 2000, the risk-free rate of interest is 5% and the dividend yield on the index is 1%. If the market 6-month forward price is 2100, is there any arbitrage opportunity? Explain how you would hedge or speculate this situation

Reference no: EM132932873

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