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BUG's Stock Price S Is $50 Today

Question 7

Multiple Choice

BUG's stock price S is $50 today.It pays a dividend of $0.25 after two months and $0.30 after five months.The continuously compounded interest rate is 4 percent per year.If the six-month forward price is $51,the arbitrage profit that you can make today by trading one forward contract and other securities is:


A) 0
B) $0.18
C) $0.41
D) $0.53
E) None of these answers are correct.

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