the domestic risk-free rate is 3%, the foreign risk free rate is 4%, and the maturity of the forward contract is 3 years. the indirect spot exchange rate is 0.77usd/aud. the direct forward exchange rate is 1.28 aud/usd. please show the cash flow for each arbitrage activity listed in the form. please work on a continuing compounding basis

Cash Flow Time zero Time T-3 years At time 0, Borrow 1000 domestic currency @ 3% for 3 years. What is the corresponding cash flow? (0.5 marks) What is the corresponding cash flow? (Hint: How much domestic currency should be paid back to domestic bank? Is it incoming or outgoing?) (0.5 marks) What are the corresponding cash flows? (1 mark) At time 0, we convert the domestic currency we borrowed into foreign currency. At time 0, deposit the foreign currency @ 4% for 3 years. What is the corresponding cash flow? (0.5 marks) What is the corresponding cash flow? (Hint: How much foreign currency will we receive from the bank?) (0.5 marks) What is the corresponding cash flow? (0.5 marks) What are the corresponding cash flows? (Hint: How much foreign currency will be sold?) (0.5 marks) Short forward at the end of the 3rd year, sell the foreign currency that we will receive from the foreign bank at the predetermined exchange rate, 1.28AUD/USD. (Hint: How much domestic currency will be received?) (0.5 marks) Total sum What is the initial cost? (0.5 marks) What is the total cash flow? (0.5 marks)