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A) from March 15 to september there are sin mouths. ie t 2 6/12 1/2 We know, fa Soert withi So ? 125, torward price with 827% t²0.5 f 125 eo z 129.45 0.07X0.5 Since forward price is $123 in the market but the correct value is $129.45 that means there is an arbitrage oppurtunity and the same can be caproited by Shanting selling the stock and putting the money in Dank to earn ruk free date and hong | Buying perward contract Al the day of incurian buy the stock by liquidating the deposit in bank and carolumith the stock to broker CamScanner
B) Arbitrage oppurtunity " when the toward prin calculated by boert doesn't match with real market value of teward contract Also, it spot prices forward price doesn't mean that oppucturinty hus of arbitrage As. there may be a case that storage cost is so high that the demand price calculated from Soer-Rr actually be equal to cussent denward price In this case since there is no storage cest, FL So means there lies oppurtunity for arbitrage. Ics Scan Cams.ca
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