The S&R index spot price is 1100, the risk-free rate is 5%, and the continuous dividend yield on the index is 2%. a. Suppose you observe a 6-month forward price of 1120. What arbitrage would you...

The S&R index spot price is 1100, the risk-free rate is 5%, and the continuous dividend yield on the index is 2%.

a. Suppose you observe a 6-month forward price of 1120. What arbitrage would you undertake?

b. Suppose you observe a 6-month forward price of 1110. What arbitrage would you undertake?