Make a sure gain in one year

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Reference no: EM133021104

The price of gold is currently $1,000 per ounce. Forward contracts are available to buy or sell gold at $1,060 per ounce for delivery in one year. An arbitrageur can borrow money at an interest rate of 5% per annum. What transactions should the arbitrageur do to make a sure gain in one year? Assume that the cost of storing gold is zero

Reference no: EM133021104

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