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BKM Ch17 problem 3 3: A one-year gold futures contract is selling for $1,247. Spot gold prices are $1,200 and the one-year risk-free rate

BKM Ch17 problem 3 3: A one-year gold futures contract is selling for $1,247. Spot gold prices are $1,200 and the one-year risk-free rate is 2%. a) According to spot-futures parity, what should be the futures price? b) What risk-free strategy can investors use to take advantage of the futures mispricing, and what would be the profits from that strategy?

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