The spot price of oil is $50 per barrel and the cost of storing a barrel of oil

for one year is $3, payable at the end of the year. The risk-free interest rate is 2%

per annum. What is an upper bound for the one-year futures price of oil? Suppose

that the observed one-year futures price of oil is $59. Do investors have arbitrage

opportunities here? What is an arbitrage strategy and its profit if your answer to the

previous question is yes?