Consider a single-stock forward contract on Apple stock. Suppose that the contract expires before Apple’s next cash dividend. Consider the following scenario:
Risk-free interest rate: r = 1.25% per year, continuously compounded.
Current spot price of Apple stock: $111.79 per share.
Contract expiration: T = 2 months.
Forward price on Apple single-stock forward: $115 per share.
Does an arbitrage opportunity exist? If so, what is the net profit per share when the forward contract expires? Use a strategy that has zero net cash flows today.