In this problem,

the domestic currency is the dollar and the foreign currency is the dinar. Today (time 0) the price of 1 dinar is $20.

A dealer offers forward contracts on 1 dinar (long or short positions) expiring in 200 days. The delivery price is $16 and the down-payment (paid today by the long party) is $3.50. (In the table you may refer to it as Contract 1.)

The price today of a zero-coupon bond paying 1 dinar in 200 days is 0.9524 dinar.

The price today of a zero-coupon bond paying 1 dollar in 200 days is 0.9709 dollar.

Show that there is arbitrage. Elaborate on the transactions and the cash flows. If you wish, you can use lending/borrowing instead of bonds.

PLEASE use table to solve the question

Time-0 value Time-T value Time-0 value Time-T value