Palladium eliminates opportunities for arbitrage

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1. The spot price of palladium is $786.20 per ounce. Annual storage and insurance costs for palladium are 0.35% payable in arrears. If 9-month risk-free interest rates are 0.85%, what forward price for palladium eliminates opportunities for arbitrage?

2. A stock trades at $87.95. The stock is expected to pay a dividend of $0.225 per share in 3 months and again in 6 months. What is the forward price for a 6-month forward contract if the risk free interest rate is 0.52%?

Reference no: EM131456077

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