A 6 month future contract is being offered on 100 oz of Palladium at $991.2 per oz. The risk free zero rates for 3 and 6 months are 1.1 and 1.28%. Storage costs for Palladium are $11 per oz per quarter, paid at the end of the quarter. The spot price for Palladium is $965 per oz.
1. Given this information, what is the expected price of the future?
2. Based on your calculated future price, describe how you will arbitrage the future and calculate your profit.