4. The price of spot silver is $5 per ounce. The forward future price six months from now is $5.20. Information on spot zero rateslooking at the annual interest rate based on continuous compoundingare provided in the table above. Assume no storage costs. Given the above information, please answer the following two questions.

a. If an arbitrage opportunity exists, determine the present value of an arbitrage trade involving 1,000, 000 ounces of silver.

b. If arbitrage profits are possible, can the trader earn the profits (holding all else constant) prior to making or taking delivery?

Term Annual interest rate based on continuous compounding (months) 14- 34 2 54- 74 6 74