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Imagine you own 100 chickens and would like to sell all your chickens via a futures contract after one year. The current market price of
Imagine you own 100 chickens and would like to sell all your chickens via a futures contract after one year. The current market price of one chicken is 5. The one year yield to maturity of a zero-coupon bond is 3%. You pay 50p per chicken per year to provide it with food to your chicken and their offspring. IN one year time, the chicken can breed additional 20 chickens that are of the same selling condition. What should be the 1 year non arbitrage futures price per chicken be?
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