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Currently the spot bid price for aluminum is $2.45 per pound, and the spot offer price is $2.50 per pound. And we can also borrow
Currently the spot bid price for aluminum is $2.45 per pound, and the spot offer price is $2.50 per pound. And we can also borrow funds at 6.2% per annum, and lend at 5.8% per annum, both with continuous compounding. What should be the range for the one-year forward prices of aluminum for there to be no arbitrage opportunity? Assume there is no bid-offer spread for forward prices and also no storage cost for aluminum
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