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You wish to arrange a forward purchase of 1 unit of some commodity with delivery in 3 months. The spot price of this commodity is

  1. You wish to arrange a forward purchase of 1 unit of some commodity with delivery in 3 months. The spot price of this commodity is 350 per unit and the stated 3-month interest rate is 4%. If the commodity costs 10 per quarter to store (payable at the end of the period), develop an arbitrage argument which allows you to work out the delivery price you should be prepared to pay in 3 months.

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