A one-year gold futures contract is selling for $1,141. Spot gold prices are $1,200 and the one-year

Question:

A one-year gold futures contract is selling for $1,141. Spot gold prices are $1,200 and the one-year risk-free rate is 2%.
a. According to spot-futures parity, what should be the futures price?
b. What risk-free strategy can investors use to take advantage of the futures mispricing, and what will be the profits on the strategy?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Essentials of Investments

ISBN: 978-0077835422

10th edition

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

Question Posted: