Question
(a) Suppose that: The spot price of oil is US $20. The 1 year forward price of oil is US $23. The 1 year US
(a) Suppose that:
The spot price of oil is US $20.
The 1 year forward price of oil is US $23.
The 1 year US dollar interest rate is 5% per annum.
The storage cost of oil is 2% per annum.
Is there an arbitrage opportunity?
(b) Suppose that:
The spot price of gold is US $1,300.
The 1 year forward price of gold is US $1,360.
The 1 year US$ interest rate is 5% per annum.
Is there an arbitrage opportunity?
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Principles of Economics
Authors: N. Gregory Mankiw
8th edition
1305585127, 978-1305971493, 978-1337516860, 1337516864, 978-0357539200, 978-1305585126
