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York University - MFIN 5800 The price of gold is currently $1,500 per ounce

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York University - MFIN 5800

The price of gold is currently $1,500 per ounce. The forward price for delivery in one year is $1,700. An arbitrageur can borrow money at 10% per annum. What should the arbitrageur do? Assume that the cost of storing gold is zero and that gold provides no income.