Problemthe price of gold is currently 1000 per ounce the, Ask an Expert

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Problem:

The price of gold is currently $1,000 per ounce. The forward price for delivery in 1 year is $1,200. An arbitrageur can borrow money at 10% per annum.

Required:

What should the arbitrageur do? Assume that the cost of storing gold is zero and that gold provides no income.

Note: Provide support for your rationale.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91162952

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