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What will be the arbitrage profit for bullion

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Reference no: EM132978831

Assuming that you are going for a 1 year forward contract on 100 Gold bullions that is currently priced at $2,500 each bullion. The storage cost will be $40 each bullion for 1 year and to be paid in advance half yearly. The risk free interest rate is 8% p.a. for all maturities and it is continuously compounded. If the 1-year forward price for this Gold bullion is quoted as $2751.12 each, what will be the arbitrage profit for each bullion?

Reference no: EM132978831

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