Question
The price of gold is currently $1,400 per ounce. The forward price for delivery in one year is $1,450. An arbitrageur can borrow money at
The price of gold is currently $1,400 per ounce. The forward price for delivery in one year is $1,450. An arbitrageur can borrow money at 2% per annum. What should the arbitrageur do? Assume that the cost of storing gold is zero and that gold provides no income. Please show all work and calculations that leads to the result.
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Financial Management For Public, Health, And Not-for-Profit Organizations
Authors: Steven A. FinklerDaniel L. Smith, Thad D. Calabrese
6th Edition
978-1506396811, 150639681X
