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true or false The spot market price of premium grade palm oil is $50 per liter. A futures contract on 100,000 liters with settlement in
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- The spot market price of premium grade palm oil is $50 per liter. A futures contract on 100,000 liters with settlement in 1 year is currently priced at $55.50 per liter. The one-year interest rate is 8% p.a. (continuously compounded) and it costs $0.70 per liter per year (payable at the beginning of each year) to store palm oil. You can make riskless arbitrage profit of $58,000 (to the nearest dollar) by buying 100,000 liters of physical palm oil, storing it and selling one futures contract.
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