Homework Help: Financial Engineering

Posted by Samuel on Friday, March 12, 2010 at 3:45am.

Describe a potential arbitrage strategy if a put price is the same as the negative of a forward if the strike are the same. You need to specify the number of units you would long/short for each instrument, initial cash flow, and final cash flow. An arbitrage oppotunity arises only when the both cash flows are non-negative, and one of them is positive in at least one possible scenario.

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