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3. Suppose that the current price of gold is $1938 per oz and that gold may be stored costlessly. Suppose also that the continuously compounded
3. Suppose that the current price of gold is $1938 per oz and that gold may be stored costlessly. Suppose also that the continuously compounded rate of interest is 6% per annum. (a) Calculate the forward price of gold for delivery in three months. (b) Now suppose it costs $1 per oz per month to store gold (payable at the beginning of each month). What is the new forward price Step by Step Solution
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Financial Crimes
Authors: Maximilian Edelbacher, Peter Kratcoski, Michael Theil
1st Edition
0367866528, 978-0367866525
