A forward contract that began earlier matures on May 15.The value of the contract is $3,the spot is $100,a zero-coupon bond maturing on May 15 is worth $0.98,and the forward price is $100.The arbitrage profit that you can make today by trading one forward contract and other securities would be:
A) 0
B) $1
C) $1.50
D) $3.75
E) None of these answers are correct.
Correct Answer:
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