Given the Following Information,calculate the Expected Arbitrage Profit or Loss

question 51

Multiple Choice

Given the following information,calculate the expected arbitrage profit or loss from buying an ounce of gold today for $553 and selling a futures contract that matures in six months' time at a price of $570.Assume interest rates are 10% p.a. ,insurance costs are $20,the risk factor is 5 per cent on the cost of gold,and projected gold production over the next 12 months is 5000 ounces.

• A)$0
• B)($31)
• C)$17
• D)$31

---

Definitions:

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of the banking industry, and stability of the financial system.

Interest Rates

The cost of borrowing money or the return on invested capital, expressed as a percentage of the principal, affecting economic activity by influencing spending and saving behaviors.

Unemployment

The situation in which individuals who are capable of working and are seeking work are unable to find employment.

Marginal Propensity

The ratio of change in an economic variable (such as consumption) that occurs with a change in another variable (such as income).