Problem 4 (10 pts.) On July 15, gold is selling for $1838.20 per troy oz. in the spot market while the futures price for 4-month (120 day) November gold is $1802.50 per troy oz. on a 100 oz. contract. If the risk-free rate is 2.05%, determine what profit an investor will realize if he/she uses arbitrage ( cash-and-carry or reverse cash-and-carry) to exploit the situation. (Assume the investor uses 2 gold futures contracts, and that no carrying costs are involved for storage, insurance, or for borrowing an item for use in an arbitrage position.) Show all work, carrying all calculations out to four (4) decimal places. Highlight your answer in bold. NOTE: Walk through the steps employed in the process for carrying out cash-and-carry or reverse cash-and-carry arbitrage by calculating or stating clearly: 1) What the Futures Price should be according to the cost-of-carry model? 2) Which arbitrage process ( cash-and-carry or reverse cash-and-carry ) approach you would use? 3) How you would set up the arbitrage process you would use? 4) What the total profit from the arbitrage will be if you employ 2 contracts