Pricing of forward contracts - Arbitrage-free pricing Exercise 1 An investor may buy a bushel of corn for $500 today or may engage in a respective forward contract with a maturity of 3 months (1/4 year). Assume that the risk-free interest rate is at 5%. Further assume that costs of carry are at 2% and the convenience yield is (A) at 3% and (B) at 990. - Calculate the forward-price for each of the two scenarios (A) and (B) and interpret the different results! . Scenario A: F(T) S e Scenario B: F(T) = S * e(r+c-y)-T