We have learned about the concepts of arbitrage and parity in class. a) How can we exploit arbitrage opportunities due to misplacing to re-establish parity conditions? Will arbitrage opportunities persist? Discuss. (3 marks) b) Consider the following example: 1kg of silver costs $860 USD in New York and $1,150 AUD in Sydney. The current exchange rate is 1 USD =1.37 AUD. Is there an arbitrage opportunity? Will you start in Sydney or in New York? Show each step of your strategy. How much profit will you make? (4 marks) c) Revisit your answers from a) and b). How will your strategy of b) help establish a parity condition? What happens to the price of silver in Sydney (will it go up or down?), the price of silver in New York (will it go up or down?) and the USD/AUD exchange rate (which currency will appreciate and which will depreciate)