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What is the profit the arb can lock in

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Reference no: EM133002094

The spot/cash price of corn is $4.00 per bushel. The futures are trading at $4.25/bu. If the futures price is pushed to $4.40 (without a change in the cash price), show how an arbitrageur can lock in a profit (to be realized at maturity).

a. What is the profit the arb can lock in?

b. Show the step-by-step detail of what the arb needs to do to achieve that profit.

Reference no: EM133002094

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