Suppose a trader observes the following prices on June 15 (6/15 = t). The futures price of gold for September 15 (= T1) delivery is $450/oz. That is tFoT1 = $450. The futures price of gold for December 15 (= T2) delivery is $460/oz. That is tFoT2 = $460. The borrowing and lending rate is 4% per annum and the storage cost T1CT2 is $2.00, which is payable on 12/15. Assume tFT2 = tFT1 (1 + T1rT2) + T1CT2 is the equilibrium situation. What is the arbitrage profit?

a. $2.00

b. $1.75

c. $2.50

d. $3.50