Assume that markets are perfect in the sense of being free


Assume that markets are perfect in the sense of being free from transaction costs and restrictions on short selling. The spot price of gold is $1,000. Current interest rates are 8% per year compounded monthly. According to the cost-of-carry model, what should the price of a gold futures contract be if expiration is six months away?

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Financial Management: Assume that markets are perfect in the sense of being free
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