The following data relates to ABC Ltd.’s share
prices:
Current price per share
Rs. 180
Price per share in the futures market-6
months Rs. 195
It is possible to borrow money in the market
for securities transactions at the rate of 12% per annum. Required:
(i) Calculate the theoretical minimum price of
a 6 month-forward contract.
(ii)
Explain if any arbitraging opportunities exist.
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