PROBLEM 2: Show how you would conduct profitable arbitrage using the instruments and prices listed in each part below. In the Transaction column, list each instrument and whether you are buying (long) or selling (short). Next, enter the values for the Time 0 and Time t cash flows with the correct signs. Finally, in the last row of the table, calculate the profit from the arbitrage. Also answer the related questions below each table. All interest rates are annualized. Part A: An asset is currently trading at S100, the 6-month forward is currently trading at S103 and you can borrow or lend at 7% interest. Show how you would profitably arbitrage these price relationships Transaction: Time 0 cash flows: Time t cash flows: Total Profit: Al what forward prcewil i abtge be unprofifable Without doing any calculations, would you expect the interest rate on the forward contract to be greater than 7% or less than 7%? What is the reasoning behind your answer? Without doing any calculations, is the forward priced at full carry? What is the reasoning behind your