1. Copper spot price is $3.50 a pound. The cost of carry for copper is 3.2% and...
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1. Copper spot price is $3.50 a pound. The cost of carry for copper is 3.2% and the current risk-free rate is 2.2%, both rates are per annum with continuous compound for 6-months. The future price is $3.55 for delivery in 6-months. What is convenience yield on copper? 2. Determine the future value at the end of the final year if the below deposits are made at the beginning of each year into an account paying annual interest of 6%.
Beginning of year | Cash flow |
1 | 19,000 |
2 | 9,800 |
3 | 32,000 |
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