Assuming positive basis and negligible borrowing cost, which of the following transactions could yield positive arbitrage profits if pursued by a hedge fund?

Question

Quizplus · Accepted Answer

Buy gold in the spot market at a lower price and simultaneously sell the futures contract at a higher price to lock in the price difference. As the cost of borrowing is negligible, the hedge fund can earn riskless profit during the delivery period.

Assuming Positive Basis and Negligible Borrowing Cost, Which of the Following