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What should an arbitrageur do when the one-year forward price of a consumption commodity is too high? Assume that the asset provides no income. A)

What should an arbitrageur do when the one-year forward price of a consumption commodity is too high? Assume that the asset provides no income.

A) Borrow the spot price of the asset plus storage cost, buy one unit of the asset and enter into a short forward contract to sell the asset in one year.

B) Borrow the spot price of the asset plus storage cost, buy one unit of the asset and enter into a long forward contract to buy the asset in one year.

C) Short the asset, invest the proceeds of the short sale at the risk-free rate, and enter into a long forward contract to buy the asset in one year.

D) None of the above works

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