Is there an arbitrage

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The current bid and ask prices of a share in the firm NoDividends (NDV) are $20 and $20.10 respectively. The 6-month T-Bill rate (lending rate) and the LIBOR rate (borrowing rate) are respectively 5% and 6% (both in continuously compounded terms). Assume that there are no other transactions costs. If the current bid and ask prices for a 6-month forward on NDV stock are $20.35 and $20.45 respectively, is there an arbitrage? If so, what is it? If not, explain why not.

Reference no: EM133557948

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