Question: One-year goldfish futures are currently selling for $84.71 per contract. Goldfish are currently selling for $62 each (this is an expensive breed of goldfish due to its rarity). Goldfish cost $7 per year to house and feed which is a cost paid in advance each year. The current risk free rate is 8% pa continuously compounded.
a) Calculate the theoretical one-year goldfish futures price. Give your answer in dollars and cents to the nearest cent.
b) Given these conditions, an arbitrager should ( sell /buy) the goldfish now and ( short /long) one-year goldfish futures contracts.