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Q. Suppose which the spot price of gold is $370 also buying an ounce of gold incurs transaction costs of $1.25. Gold can be stored for $.15 per month per ounce. Per month Insurance cost is 0.001 of the spot price. Restrictions on short selling effectively mean which the reverse cash-also-carry trader in the gold market receives the use of only 90 percent of the value of the gold which is sold short. The interest rate is 10 percent per annum, with monthly compounding. This is the borrowing rate. Lending brings only 8 percent, compounded monthly. Based on this new information, illustrate what is the permissible range of futures prices if expiration is nine months away?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9365731

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