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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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