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Julie just bought a random length lumber futures contract. Suppose that the storage costs are 8% per year of the lumber. The current spot price
Julie just bought a random length lumber futures contract. Suppose that the storage costs are 8% per year of the lumber. The current spot price is $1,291.80 per 1,000 board feet. One forward contract is for 110,000 board feet. The risk-free interest rate is 1 percent per year with continuous compounding. Find the forward price for one contract.
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