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14-10 a. If the spot price of gold is $989 per troy ounce, the risk-free interest rate is 5%, and storage and insurance costs are

14-10

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a. If the spot price of gold is $989 per troy ounce, the risk-free interest rate is 5%, and storage and insurance costs are zero, what should be the forward price of gold for delivery in one year? (Round your answer to 2 declmal pleces.) b. Calculate risk-free arbitrage profits if the forward price is $1,089. (Round your flnal answer to nearest whole doller amount.)

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