(a) Calculate the futures price for the delivery of silver in 10 months. The current silver price is $26.90 per ounce and the storage cost for silver is 36 per ounce and year payable at the end of the contract.

(b) Suppose the current futures price for the 10-month silver contract on the CME is $27.55. Devise an arbitrage strategy using one futures contract! What is your arbitrage profit?

For the whole assignment you can assume the following market data: US risk-free rate: RP (US) Canadian risk-free rate: RCA) = 2.2% p.a. All interest rates are given with continuous compounding. = 1.5% p.a