Trader owns gold as part of long term investment portfolio

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A trader owns gold as part of a long term investment portfolio. The price is $950 per ounce. The trader can borrow and invest funds at 6% with continuous compounding. The storage cost is$3 per ounce, paid at the end of the six months of storage. If the bid for the futures contract with six months until expiration is equal to $970 while the ask is $972 per ounce, are any arbitrage opportunities? How would you take advantage of them and what is the maximum expected gain? Please describe the strategy in detail. Assume that there is no bid-ask spread for spot.

Reference no: EM131464089

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