10:51 AM Wed Feb 5 4 57% aso Fare 4240 Insert Draw Home View Spelling ) Immersive Reader 100% 5> Page Width Paper Color Paper Style Password Protection 2 Wednesday, February 5, 2020 10:02 AM 1.It is January 30, 2020. The use of corn within the ethanol industry is widespread and is a significant and growing source of demand for corn. Corn is the main feedstock used for producing ethanol fuel in the United States and Canada. The current spot corn price is $4.40 per busHel, and the risk-free rate of interest is 5% per annum with continuous compounding. An ethanol-company has just taken a long position in a 9-month forward contract on 500,000 bushels-of corn. a.Suppose that there are no storage costs for corn. What should the 9-month corn forward price for this contract be? What should the value of the corn forward contract be on January 30that the time the contract is first entered? b.Three months later, on April 30th, 2020, the spot price of corn is $4.50 per bushel, and the risk-free rate of interest is still 5% per annum. Compute the forward price and the value of the short forward position on April 30th, 2020. c.In Question 1.a, suppose now there is a storage cost of $0.25 per bushel, with payment made at the end of 9 months. The risk-free rate of interest is still 5% per annum. What is the present value of the storage cost? Calculate the forward price of corn on January 30th, 2020. d. In Question 1.a, suppose a corn ethanol processor firm obtains a convenience yield of 1.4% per annum from holding inventory of corn. The risk-free rate of interest is still 5% per annum. What should the 9-month corn forward price for this contract be(on Jan 30)? On April 30th, 2020, the spot price of corn is $4.50 per bushel. Compute the forward price of the contract on April 30th, 2020. Compute the value of the long forward contract on April 30th, 2020. 2.It is January 31, 2020.A local wheat miller-is a large producer of Semolina Pasta Flour whose main ingredient is wheat. The demand for the Semolina Pasta Flour is seasonal with the large demand occurring mid-June through the end of August. Production schadulos roguiro the accusation of 50 buchols of whout in lato May to moot tho cummor concon domand Thomananomont 10:51 AM Wed Feb 5 4 57% aso Fare 4240 Insert Draw Home View Spelling ) Immersive Reader 100% 5> Page Width Paper Color Paper Style Password Protection 2 Wednesday, February 5, 2020 10:02 AM 1.It is January 30, 2020. The use of corn within the ethanol industry is widespread and is a significant and growing source of demand for corn. Corn is the main feedstock used for producing ethanol fuel in the United States and Canada. The current spot corn price is $4.40 per busHel, and the risk-free rate of interest is 5% per annum with continuous compounding. An ethanol-company has just taken a long position in a 9-month forward contract on 500,000 bushels-of corn. a.Suppose that there are no storage costs for corn. What should the 9-month corn forward price for this contract be? What should the value of the corn forward contract be on January 30that the time the contract is first entered? b.Three months later, on April 30th, 2020, the spot price of corn is $4.50 per bushel, and the risk-free rate of interest is still 5% per annum. Compute the forward price and the value of the short forward position on April 30th, 2020. c.In Question 1.a, suppose now there is a storage cost of $0.25 per bushel, with payment made at the end of 9 months. The risk-free rate of interest is still 5% per annum. What is the present value of the storage cost? Calculate the forward price of corn on January 30th, 2020. d. In Question 1.a, suppose a corn ethanol processor firm obtains a convenience yield of 1.4% per annum from holding inventory of corn. The risk-free rate of interest is still 5% per annum. What should the 9-month corn forward price for this contract be(on Jan 30)? On April 30th, 2020, the spot price of corn is $4.50 per bushel. Compute the forward price of the contract on April 30th, 2020. Compute the value of the long forward contract on April 30th, 2020. 2.It is January 31, 2020.A local wheat miller-is a large producer of Semolina Pasta Flour whose main ingredient is wheat. The demand for the Semolina Pasta Flour is seasonal with the large demand occurring mid-June through the end of August. Production schadulos roguiro the accusation of 50 buchols of whout in lato May to moot tho cummor concon domand Thomananomont
