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As a wheat futures trader, you observe the following futures prices for the purchase and sale of wheat in 3 months: $3.00 per bushel in
As a wheat futures trader, you observe the following futures prices for the purchase and sale of wheat in 3 months: $3.00 per bushel in Chicago and 320 per bushel in Tokyo. Delivery on the contracts is in Chicago and Tokyo, respectively. If the 3-month forward exchange rate is 102/$, what is the magnitude of the transaction cost necessary to make this situation not represent an unexploited profit opportunity?
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