C. (6 Marks) Show how you can make riskless profils my Question 5 (12 Marks) a. (2 Marks) You buy a forward contract today at For =$1500 and make a reversing trade (sell) just before maturity (T) at FIT=S2000 or at FTT = $1000. Calculate your profits losses and illustrate them with a graph of a buyer's (long) profile (protitve forward price) b. (2 Marks) Repeat (a) for a seller's (short) profile (4 Marks) If the spot price (So) in (a) is $1300, T = 1 yr. R=10%, show how you could make riskless profits when For=$1500. Detail your transactions and cash flows. Assume no transaction fees and interest as the only cost of carry d. (4 Marks) Repeat (c) for So = 51400 e. (Bonus 3 Marks) Define open interest and explain why it is different from volume C. (6 Marks) Show how you can make riskless profils my Question 5 (12 Marks) a. (2 Marks) You buy a forward contract today at For =$1500 and make a reversing trade (sell) just before maturity (T) at FIT=S2000 or at FTT = $1000. Calculate your profits losses and illustrate them with a graph of a buyer's (long) profile (protitve forward price) b. (2 Marks) Repeat (a) for a seller's (short) profile (4 Marks) If the spot price (So) in (a) is $1300, T = 1 yr. R=10%, show how you could make riskless profits when For=$1500. Detail your transactions and cash flows. Assume no transaction fees and interest as the only cost of carry d. (4 Marks) Repeat (c) for So = 51400 e. (Bonus 3 Marks) Define open interest and explain why it is different from volume