What is the present value of arbitrage profits

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Your company buys, sells, and stores warehouses full of gold. Today, the futures price for gold with delivery in one year is $320 per ounce. The spot price is $320 per ounce. Your company is able to invest and borrow at the risk-free interest rate of 7.1%. Furthermore, your company can, if necessary, store and safeguard an additional 750 ounces of gold for virtually free. What is the present value of arbitrage profits on 750 ounces of gold?

Reference no: EM131554659

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