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Assume that the spot price and the six-month futures price of soybeans are $4.80 and $5.20 per bushel, correspondingly. One futures contract is for buying 5,000 bushels. The six-month risk-free interest is 6% per year. The storage cost for soybeans is $0.05 per bushel for six months, paid in advance. Could you make an arbitrage profit in the soybean market? describe how?

Basic Finance, Finance

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