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Unformatted text preview: Question 3 (Arbitrage-free forward price) Suppose the stock price is $35 and the continuously compounded interest rate is 5%. Assuming dividends are zero, what is the 6-month arbitrage-free forward price? c Conceptual Questions Question 4 (Arbitrage and Law of One price) Define arbitrage and the law of one price. What role do they play in our market system? What do we call the “one price” of an asset? FINA0301 – Tutorial 0 Mr. Clive Man Chung HO 2 Question 5 (Forward vs Futures) What are the differences between forward and futures? Question 6 (Hedging, Speculation, and arbitrage) Explain carefully the difference between hedging, speculation, and arbitrage....
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- Fall '09