Suppose that the spot price of gold is $1100 per ounce. The current one-year riskless rate of

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Suppose that the spot price of gold is $1100 per ounce. The current one-year riskless rate of interest is 3%.

a. Provide a forecast for the price of gold in one year based on a relevant expectations hypothesis.

b. Provide an estimate for the one-year forward price for one ounce of gold.

c. Justify your use of the expectations hypothesis that you used in your answer to parts a and b.

d. What would cause the forward price of gold to deviate from your forecast?

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