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2 I will sell today a one-year forward contract on an amount of gold whose price is $1,000,000. To make sure I am able to
2 I will sell today a one-year forward contract on an amount of gold whose price is $1,000,000. To make sure I am able to deliver the gold at ma- turity, I must get the gold now and store it and insure it. Storage and insurance (the so-called cost-of-carry) will cost me $10,000 today and an- other $10,000 at the end of six months. The yearly interest rate is 10% which we agree to compound continuously. What is the forward price of the contract? 2 I will sell today a one-year forward contract on an amount of gold whose price is $1,000,000. To make sure I am able to deliver the gold at ma- turity, I must get the gold now and store it and insure it. Storage and insurance (the so-called cost-of-carry) will cost me $10,000 today and an- other $10,000 at the end of six months. The yearly interest rate is 10% which we agree to compound continuously. What is the forward price of the contract
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