16. Convenience yield (S27-4) Residents of the northeastern United States suffered record-setting low temperatures throughout November and December 2027. Spot prices of heating oil rose 25%, to over $7 a gallon.

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a. What effect did this have on the net convenience yield and on the relationship between futures and spot prices?

b. In late 2028, refiners and distributors were surprised by record-setting high temperatures.

What was the effect on net convenience yield and spot and futures prices for heating oil?