A one-year gold futures contract is selling for $641. Spot gold prices are $600 and the one year risk free rate is 6%. Which of the following set of transactions will yield positive riskless arbitrage profits?
A) Buy gold in the spot with borrowed money and sell the futures contract.
B) Buy the futures contract and sell the gold spot and invest the money earned.
C) Buy gold spot with borrowed money and buy the futures contract.
D) Buy the futures contract and buy the gold spot using borrowed money.
Correct Answer:
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