How a riskless arbitrage is possible

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Silver price today, December 7th, 2015 is $14.00/ounce. Each Futures contract has 5,000 ounces. Today’s interest rate for one-year rc = 5.00%. a. What is the Fair price of one Dec 7th 2016 silver futures contract? b. If the same silver contract is offered at $76,500/contract, show how a riskless arbitrage is possible.

Reference no: EM13942976

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