1. (10 pt for a, 20 pt for b) Consider a one-year forward contract on gold. Suppose that it costs $2 per ounce per year to store gold with payment being made at the end of the year. Assume that the spot price is $450 per ounce and the risk-free rate is 7% per annum for all maturities. Assume continuous compounding. a. What is the forward price F(0,1) that does not result in arbitrage profit? b. If the forward price is $460, do you get any arbitrage profit opportunity? If so, what is your strategy? (You need to provide more than buy low, sell high.)