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Cost of storing gold is zero

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The price of gold is currently $1,560 per ounce. Forward contracts are available to buy or sell gold at $1,580 per ounce for delivery in one year. An arbitrageur can borrow or invest money at 2% per annum. What should the arbitrageur do? Assume that the cost of storing gold is zero and that gold provides no income.

Reference no: EM133115054

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