The price of gold is currently $**700** per ounce. The forward price for delivery in 1 year is $**800**. An arbitrageur can borrow money at **10**% per annum given as an effective discrete annual rate. Assume that gold is fairly priced and the cost of storing gold is zero.

What is the best way to conduct an arbitrage in this situation? The best arbitrage strategy requires zero capital, has zero risk and makes money straight away. An arbitrageur should **sell 1 forward** on gold and: