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What will be the gross profit margin ratio if, total sales is N$260,000 Cost of goods sold is N$200,000 and Sales returns is N$10,000 Today is January 1

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1. What will be the gross profit margin ratio if, total sales is N$260,000 Cost of goods sold is N$200,000 and Sales returns is N$10,000

2. Today is January 1. Forward prices for contracts maturing in one year and two year trade at 106 and 109 respectively. The simple interest rate per year is 5% and remains constant forever. ( Indeed the yield curve is flat at 5% simple per year). The underlying security involves no holding costs, and pays no dividends. Assume the current spot price is 100 dollars today. (a) Demonstrate a way of generating arbitrage free profits over one year. (b) Generate a way of generating arbitrage free profits over two years. (c) If we were not given the spot price at date 0, but were given the two forward prices, can a strategy be created that leads to riskless arbitrage.