An 18-month short forward contract on 1,000 barrels of crude oil is entered into when the commodity price is $60.4 per barre 11 and the interest rate is 2% p.a. with continuous compounding. (Neglect costs of storage and convenience yields.) (a) What is the forward price for the contract at the date of entry? (b) Six months later, the price of oil is dropped to $47.1 per barrel (the interest rate is unchanged). What is the new forward price (for the remaining 12 months) and what is the current value of the original short forward contract? (c) Suppose one agrees to enter into an 18-month forward contract on 1,000 barrels of crude oil with the forward price $63,000 when the price is $60.4 per barrel and the interest rate is 2% p.a. with continuous compounding. What arbitrage opportunities does this create? Demonstrate them via an appropriate strategy