Question
1.A one- year gold future contract is selling for 1141.Spot gold prices are 1200 and the one-year risk-free rate is 2%. a. according to spot-future
1.A one- year gold future contract is selling for 1141.Spot gold prices are 1200 and the one-year risk-free rate is 2%.
a. according to spot-future parity, what should be the futures price?
b. what risk-free strategy can investors use to take advantage of the futures mispricing, and what will be the profits on the strategy?
2.It is now January.The current interest rate is 3%.The June futures price for gold is 1246.30, while the December future price is 1251.Is there an arbitrage opportunity here? If so, how would you exploit it?
explain and answer
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