The spot price of oil is ($ 80) per barrel and the cost of storing a barrel
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The spot price of oil is \(\$ 80\) per barrel and the cost of storing a barrel of oil for one year is \(\$ 3\), payable at the end of the year. The risk-free interest rate is \(5 \%\) per annum continuously compounded. What is an upper bound for the one-year futures price of oil?
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An upper bound for the oneyear futures price of oil can be found by considering the opportunity cost ...View the full answer
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