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Consider one year futures contract on gold. It costs $2 per ounce per year to store gold with payment being made at the end of
Consider one year futures contract on gold. It costs $2 per ounce per year to store gold with payment being made at the end of the year. The risk free rate is 5% and the spot price is $1, 600. What should be a fair futures price? Suppose that the observed futures price is $1, 650. What investor should do if she has 100 ounces of gold?
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