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Consider a 1-year futures contract on an investment asset that provides no income. It costs $2 per unit to store the asset, with the payment

Consider a 1-year futures contract on an investment asset that provides no income. It costs $2 per unit to store the asset, with the payment being made at the beginning of the year. Assume that the spot price is $400 per unit and the risk free rate is 10% per annum for all maturities. a) What should be the price of the 1-year futures contract on this investment asset? b) If currently the bid and ask on this 1-year futures contract are $444.5 and $445 respectively, what will you do? Please be specific and describe what this would imply? c) If this asset provides a lump sum income distribution mid year that you forgot to estimate in a above would you still be confident about your suggestion in b? Please explain

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