A trader can sell gold at $794.00 per ounce and buy it at $800.00 per...
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Finance
A trader can sell gold at $794.00 per ounce and buy it at $800.00 per ounce. The trader can invest money at 5.7% per year and borrow money at 6% per year, each compounded annually.
For what range of two-year forward prices of gold does the trader have no arbitrage opportunity? Assume no storage costs.
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