8.

a. Suppose the March Year 1 forward price were $3.10. Describe two different transactions you could use to undertake arbitrage.

b. Suppose the September Year 1 forward price fell to $2.70 and subsequent forward prices fell in such a way that there is no arbitrage from September Year 1 and going forward. Is there an arbitrage you could undertake using forward contracts from June Year 1 and earlier? Why or why not?