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The price of gold is currently $1,570 per ounce. Forward contracts are available to buy or sell gold at $1,625 per ounce for delivery in
The price of gold is currently $1,570 per ounce. Forward contracts are available to buy or sell gold at $1,625 per ounce for delivery in one year. 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.
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