Futures price be for contract with time period of one year

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The current spot price of gold is $1,020 per ounce. The risk free rate is 3% per year. A gold futures contract has a contract size of 100 oz. Assume that anyone can borrow at the risk-free rate. (10 pts) a. What should the futures price be for a contract with a time period of exactly one year? b. Say that you observe that the contract for gold with a time period of exactly one year is actually selling for $1,060. Describe a strategy that you could use to make a profit that would exceed the risk free rate, and what profit you could earn.

Reference no: EM13953908

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