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Consider a one-year futures contract on crude oil. Assume that it costs 2% of the price of crude oil to store a barrel of oil
Consider a one-year futures contract on crude oil. Assume that it costs 2% of the price of crude oil to store a barrel of oil and the payment is made at the end of the year. The current price of oil is $25 and the risk-free continuously compounded interest rate is 6%. Assume there is no convenience yield. Which of the following values comes closest to the maximum value of a one-year crude oil futures contract? a $26.02 b $26.54 c $26.76 d $27.08
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