Pricing of forward contracts-Arbltrage free pricing- Exercise 2 (Homework) An investor may buy three ounces of gold for $4,000 today or he may engage in a respective forward contract with a maturity of 9 months (9/12 year). Assume that the risk-free interest rate is at 4%. Further assume that convenience yield is at 10% and the cost of carry is (A) at 1%, (B) at 9%, (C) at 15%, (D) at 21% and (E) at 25%. Calculate the forward-price for each of the five scenarios (A) (E)! Discuss why your results change between the scenarios