What is the correct theoretical futures price

Assignment Help Finance Basics

Reference no: EM132180124

Question - The current spot price of gold is $1,315 per ounce. The 11-month risk free rate is 0.75% (annualized, continuously compounded). Your broker quotes you an 11-month futures contract at $1,391. Assume storage costs are $0.23 monthly per ounce, paid at the end of the storage period. What is the correct theoretical futures price? What is the arbitrage trade/profit using the price you were quoted?

Reference no: EM132180124

Questions Cloud

How much would you expect your call option to sell : There was 50/50 chance of price going in the future to 100 or 120, how much would you expect your call option (at 105) to sell for

Discuss the use of computers in policing : You can blog on any of the following topics: Police and Arrest, Search and Seizure and Custodial Interrogation procedures. The use of Computers in Policing.

Review trial court determinations : The "clearly erroneous" standard is applied here, as it is in many cases where appellate courts review trial court determinations.

Forecast when developing action plan : Why is it so important to include a time frame or forecast when developing an action plan?

What is the correct theoretical futures price : Assume storage costs are $0.23 monthly per ounce, paid at the end of the storage period. What is the correct theoretical futures price

Discuss strategic analysis decisions in the next five years : Discuss strategic analysis decisions in the next five years, what we need to watch out for in the information technology (IT) field, and how these decisions.

How the issues may be mitigated : What are your thoughts as CEO of the concept and the associated steps in designing an effective "strategic control system"? Please thoroughly discuss.

What is the appropriate price or yield to maturity : You need to value a series of bonds, with maturities ranging from 1 to 50 years. What is the appropriate price or yield to maturity for each of the bonds below

How did this enhance their direct mail strategy : How did this enhance their direct mail strategy? Explain in your words the Strategic Management Process.

User Account

All Pages