In the spring of 1999, the U.S. Dollar-Deutschemark (DM) exchange rate was $0.5405 per DM. The U.S. and German interest rates (annualized, continuously compounded) were r = 6% and = 7.5%, respectively. Suppose the actual quoted price for a 3-month forward contract was $0.5632 per DM. You, an arbitrageur, will identify any possible arbitrage opportunity and set up arbitrage strategy to earn arbitrage profits.

Please fill out the following arbitrage trading tables to illustrate the arbitrage strategy and corresponding payoffs. By default, please round the number solution to 4 decimal places, except for requiring otherwise.

Transaction (NOW) Payoff (Now t=0) Payoff (t=6 month) (please input buy or sell) one futures contract on 1 unit of DM (please input buy or short) unit(s) (please input the number of units to trade) of DM (please input borrow or lend) loan for 3 months Net payoff: $ payoff: $