A 1-year gold futures contract is selling for $1,645. Spot gold prices are $1,592 and the 1-year risk-free rate is 3%.
Based on the above data, 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:
Verified
Q69: Sahali Trading Company has issued $100 million
Q70: You believe that the spread between the
Q71: On Monday morning you sell one June
Q72: The _ contract dominates trading in stock-index
Q73: If the risk-free rate is greater than
Q75: On Monday morning you sell one June
Q76: From the perspective of determining profit and
Q77: The _ and the _ have the
Q78: You own a $15 million bond portfolio
Q79: A hypothetical futures contract on a nondividend-paying
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents