Which of the following is inconsistent with the notion that there are no arbitrage opportunities?

Select one:

Investment strategy A is very safe. No matters what happens, it will generate a guaranteed payoff at time $T$ of $$100.$

In contrast, the future payoff to investment strategy B is highly uncertain $--$ it could be high or low. Nevertheless, strategy B has an

expected payoff is $$100.$

Since A and B both have expected payoffs of $$100,$ the cost to enter both strategies today must also be identical.

The future payoff to an investment strategy is known today with complete certainty. Therefore, the spot price to enter this strategy

today will be such that whoever enters today will earn the riskfree rate of interest over the investment horizon.

Investment strategy A always generates the same future payoff as investment strategy B$.$ It follows that the current price to enter A

must be identical to the current price to enter $B.$

An investment product is structured such that its payoff at future time $T$ is guaranteed to be $$0.$ It follows that the current price to

enter this strategy must also be $$0.$

All of the above are consistent with the notion that there are no arbitrage opportunities.

A short forward contract can be "synthetically replicated" as follows:

Select one:

Short sell the underlying asset and borrow money

Borrow money and buy the underlying asset

Borrow money and short sell the underlying asset

Short sell the underlying asset and invest the proceeds in the bank

The spot price of silver is $$23$ per ounce.

The fair forward price for delivery of silver $6$ months from now is $$25.$ However, you notice that silver forward contracts with delivery in $6$ months are quoted at $$27$ per ounce.

What trades are required now to capture this arbitrage opportunity?

Select one:

Enter a short forward to deliver silver in $6$ months for $$27,$ then simultaneously enter a long forward contract to buy silver in $6$ months at the fair price of $$25.$

Enter a short forward to deliver silver in $6$ months for $$27,$ then borrow $$23$ and buy an ounce of silver today in the spot market for $$23.$

Enter a long forward to purchase silver in $6$ months for $$27,$ then short sell an ounce of silver today for $$23$ and invest the proceeds in the bank.

Enter a long forward to purchase silver in $6$ months for $$27,$ then simultaneously enter a short forward contract to deliver silver in $6$ months at the fair price of $$25.$

The spot exchange rate between Australia and New Zealand is AUD $1\mathrm{.}00=$ NZD $1\mathrm{.}1.$ Interest rates in Australia and New Zealand are $4\%$ and $7\%$ per annum respectively.

Calculate the fair forward price for delivery of one AUD in $8$ months time.

Your answer will be expressed in terms of NZD$.$ Give an answer to $4$ decimal places.