1. If you buy spot gold for $280 and sell one-year gold futures for $300 on a hypothetical day, the cost is: 280 * (1+4%) = 29 1.2 If the warehousing, transportation and delivery costs are ignored; The arbitrage rate of return is: (300-291.2)/300 = 2.93%;
2. When the one-year price is $270, the spot price is higher than the futures price, so there is no arbitrage space. Even if you already have spot gold: 270*( 1+4%)=280.8, the cost of buying futures will be higher than the price of selling spot gold for $280, so there is no arbitrage opportunity.
3. If the warehousing cost is ignored, when the one-year futures price is lower than: 300/( 1+4%)=288.6, the spot arbitrage opportunity disappears.