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Identify an arbitrage trade implied by prices

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Reference no: EM132818065

The spot price of lean hogs is $0.95 per pound. Suppose that the risk-free rate is 3.00%, storage costs for hogs are 2.25%, and that the convenience yield for hogs is estimated to be 2.5%.

Nine-month forward contracts are currently quoted at a rate of $0.92. Identify an arbitrage trade implied by these prices.

Reference no: EM132818065

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