Gold is 1200 an ounce for purchase tomorrow1 a the 9 month, Ask an Expert

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Gold is $1200 an ounce for purchase tomorrow.

1 a The 9 month gold future is $1400 an ounce. Interest rates are 3%.

Is there an arbitrage?

What trades would you do?

What is this trade called?

b. Gold is $1300 an ounce for purchase tomorrow. Storage costs are $50 a year.

The 6 month gold future is $1200 an ounce. Interest rates are 4%.

Is there an arbitrage? Why or why not?

What trades would you do (assuming you can do them)?

What is this trade called?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92395103

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