Multiple Choice
Assuming positive basis and negligible borrowing cost, which of the following transactions could yield positive arbitrage profits if pursued by a hedge fund?
A) Buy gold in the spot market, and sell the futures contract.
B) Buy the futures contract, and sell the gold spot and invest the money earned.
C) Buy gold spot with borrowed money, and buy the futures contract.
D) Buy the futures contract, and buy the gold spot using borrowed money.
Correct Answer:
Verified
Correct Answer:
Verified
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