Intro

Platinum currently trades at $1,350 per troy ounce. The contract size for platinum futures is 50 troy ounces and the contract calls for physical settlement.

The yield on T-Bills is 0.017 (EAR).

Attempt 1/10 for 10 pts.

Part 1

What should be the futures price for an ounce of platinum to be delivered in 6 months?

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Attempt 1/5 for 10 pts.

Part 2

The actual futures price for platinum to be delivered in 6 months is $1,356.43. Is there an arbitrage opportunity? If so, should you go long or short the futures?

We should go short the futures

We should go long the futures

No arbitrage opportunity

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Attempt 1/10 for 10 pts.

Part 3

You decide to trade 1 futures contracts. To make this a riskless arbitrage transaction, how many ounces of platinum should you trade? Enter a positive number to buy platinum, and a negative number to short-sell platinum.

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Attempt 1/10 for 10 pts.

Part 4

If there are no margin requirements, what will be your profit per ounce in 6 months (in $)?

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