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3. Suppose we know the following information: The spot price of oil is USD 100; The quoted 1-year futures price of oil is USD 110;

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3. Suppose we know the following information: The spot price of oil is USD 100; The quoted 1-year futures price of oil is USD 110; The 1-year USD interest rate is 5% per annum (annual compounding): The storage costs of oil are 2% per annum (paid at the end of the period). Describe the arbitrage opportunity from the above information. Draw a table to show the cash flow of your identified arbitrage strategy

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