It is now January. The current interest rate is 5%. The June futures price for gold is

Question:

It is now January. The current interest rate is 5%. The June futures price for gold is $946.30, whereas the December futures price is $960.00. Is there an arbitrage opportunity here? If so, how would you exploit it?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Investments

ISBN: 9780073530703

9th Edition

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

See More Books

Question Posted: Jan 04, 2013 08:04 AM

See More Questions

It is now January. The current interest rate is 3%. The June futures price for gold is $1,246.30, while the December futures price is $1,251. Is there an arbitrage opportunity here? If so, how would...
You observe that the current interest rate on short-term U.S. Treasury bills is 4.76 percent. You also read in the newspaper that the GDP deflator, which is a common macroeconomic indicator used by...
It is now January 1, 2009, and you are considering the purchase of an outstanding bond that was issued on January 1, 2007. It has a 9.5% annual coupon and had a 30-year original maturity. (It matures...
Consider the hypothetical eutectic phase diagram for metals A and B, which is similar to that for the lead-tin system, Figure 9.8. Assume that (1) and phases exist at the A and B extremities of the...
A 24 ft ladder is placed upright against a wall. Then the top of the ladder slides down the wall while the foot of the ladder is pulled outward along the ground at a steady rate of 2 ft/s. a. Find...
For some transformation having kinetics that obey the Avrami equation (Equation 10.17), the parameter n is known to have a value of 1.5. If the reaction is 25% complete after 125 s, how long (total...
Use the all-possible-regressions selection on the patient satisfaction data in Table B.17. Perform a thorough analysis of the best candidate models. Compare your results with stepwise regression....
In Figure where V23 = 3.00V1, n moles of a diatomic ideal gas are taken through the cycle with the molecules rotating but not oscillating. What are? (a) p2/p1 (b) p3/p1 and (c) T3/T1 For path 1 ?? 2,...
Presented below are selected ledger accounts of Concord Corporation as of December 31, 2025. Cash Administrative expenses $44,000 88,000 Selling expenses Net sales 70,400 475,200 Cost of goods sold...
As the global leader in satellite navigation equipment, Garmin Ltd. recently hit a milestone number. It has sold more than 100 million of its products to customersfrom motorists to runners to...
Consider a stock that pays no dividends on which a futures contract, a call option, and a put option trade. The maturity date for all three contracts is T, the exercise price of the put and the call...
OneChicago has just introduced a single-stock futures contract on Brandex stock, a company that currently pays no dividends. Each contract calls for delivery of 1,000 shares of stock in 1 year. The...
What percentage of your writing time did you spend on each element of the ACE process (analyzing, composing, and evaluating)? Will you change your approach in the future? Explain why or why not.
What event triggered the end of the oil-for-food program?
What was the name of the former U.N. Secretary General Boutros Boutros-Ghalis brother-in-law who was indicted related to the oil-for-food scandal?
Which of the following most accurately indicates why conflicts of interest create concern? 1. In a conflict of interest, a person accepts illegal payments as a direct result of their actions. 2. A...
Is Mickey Monus now out of jail?
Explain what is meant by the human factor? 1. The human factor means that all persons suffer from fits of bad judgment, which leads to fraud. 2. Greed is the defining human factor. 3. Human failings...
The equilibrium constant for the water-gas shift reaction is 5.0 at 400 C. Determine the direction of the reaction if the following amounts (in moles) of each compound are placed in a 1.0-L...
Which internal control principle is especially diffi cult for small organizations to implement? Why?
Use a bar graph to plot the frequency distribution. Use the goaltenders salaries for the 1991 NHL season given in the following table to answer question. Name Patrick Roy Ed Belfour Ron Hextall Mike...
Using the CAPM, show that the ratio of the risk premiums on two assets is equal to the ratio of their betas.
Suppose you observe the following situation: Assume these securities are correctly priced. Based on the CAPM, what is the expected return on the market? What is the risk-freerate? Security Oxy Co....
Show that another way to calculate beta is to take the covariance between the security and the market and divide by the variance of the markets return.
A friend owes you $500 in 1 year from now, and then $1000 2 years from now. Both loans are at 5%. If you want to replace both of these loans with ONE PAYMENT NOW, how much would your friend give you ?
If the amount of retained earnings at the beginning of the year was $ 3 0 , 0 0 0 , and $ 1 2 , 0 0 0 in dividends is paid during the year, calculate net income for the year.
On January 2, 20Y4, Whitworth Company acquired 33% of the outstanding stock of Aloof Company for $330,000. For the year ended December 31, 20Y4, Aloof Company earned income of $86,000 and paid...

It is now January. The current interest rate is 5%. The June futures price for gold is

Question:

Step by Step Answer:

According to the parity relation the proper price for D...View the full answer

Investments

Students also viewed these Accounting questions