How much would you make


Problem

The current spot price of Amazon stock is $1,823 the current 1-year forward price is $1,944. The current 1-year risk-free rate is 6.5% per annum with semiannual compounding. If there is a $20 transaction fee for the combination of all transactions made, paid today, can you make an arbitrage profit with 100 shares? If there is an arbitrage how much would you make? Otherwise, prove that there is no arbitrage.

 

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: How much would you make
Reference No:- TGS03315930

Expected delivery within 24 Hours