Determine whether there is an arbitrage opportunity if, Financial Management

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Determine whether there is an arbitrage opportunity if

The current time is t = 0. Suppose the present value of a forward contract on a certain asset is 10. The delivery price is K = 100 and the maturity is T = 5. Suppose the forward price on the asset is 110. Suppose the continuous interest rate is 2% for time 0 to T. Determine whether there is an arbitrage opportunity. If there is, find an arbitrage portfolio. Verify the portfolio you construct is an arbitrage portfolio.

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Financial Management: Determine whether there is an arbitrage opportunity if

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