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

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Definitions:

Water Table

The upper level of an underground surface where the soil or rocks are permanently saturated with water, marking the boundary between the water-saturated ground and unsaturated ground above.

Precipitation

Any variety of water, in liquid or solid form, that comes down from the atmosphere and touches the earth, including various forms like rain, snow, sleet, and hail.

Runoff

This refers to the water from rain, snow, or other sources that flows over the land's surface and is not absorbed, eventually making its way into rivers, lakes, and oceans.

Faulting

The geological process by which rocks on opposite sides of a fracture or fault move relative to each other, often leading to earthquakes.