Tom is planning to use a forward contract to purchase 100 ounces of gold in two months time. The current spot price of gold is $1,970 per unit. Assume that Tom can borrow and lend at 3% p.a. compounded quarterly.

a. Use the arbitrage-free pricing principle to calculate the fair forward price for gold per ounce. Round your result to two decimal places.

b. Suppose that the forward price for purchase or sale of gold in two months time is $1,920 per unit. List and explain all the steps that Tom needs to undertake in order to make an arbitrage profit from a forward contract on 100 ounces of gold in two months time. Make sure you outline all that needs to happen on all relevant dates, as well as today

c. Suppose that the forward price for purchase or sale of gold in two months time is $2,030 per unit. List and explain all the steps that Bob needs to undertake in order to make an arbitrage profit from a forward contract on 100 units of gold in three months time. Make sure you outline all that needs to happen on all relevant dates, as well as today.