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Demonstrate how you can make arbitrage profits in the market

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Reference no: EM131457956

Question: The spot price of silver is $30 per ounce. The simple interest rate is 6 percent per year. The quoted six-month forward price for silver is $31.

a. What should be the arbitrage-free forward price for silver for a forward contract maturing in six months?

b. Demonstrate how you can make arbitrage profits in this market.

Reference no: EM131457956

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