Let x be your Unisa student number. Suppose you own a security currently worth R x$.$ You plan to sell it in two months.

To hedge against a possible decline in price during the next two months, you enter into a forward contract to sell the

security in two months. The risk$-$free rate is $3\mathrm{.}5\%$ per annum.

$1\mathrm{.}1$ Determine the forward price of this contract. $[2]$

$1\mathrm{.}2$ Assume that the dealer offers to enter into a forward contract at x $20000$ rand. Indicate how you could earn an

arbitrage profit if this is possible. If not, explain why not. $[4]$

$1\mathrm{.}3$ After one month, the security sells for x $100000$ rand. Determine the gain or loss to your position. $[2]$

Please give the numerical answers that you have obtained by substituting your student number for x$.$