Refer to the following table of commodity forward and spot prices. The continuously compounded risk free rate is 4.0% and no storage cost.

a. What is the approximate annualized convenience yield on the 12-month corn forward contract?

A) 5.07% B) 6.25% C)7.50% D) 8.34% E) 9.46%

b. What is the approximate annualized convenience yield on the 18-month soybean forward contract?

A) 0.69% B) 1.21% C) 2.89% D) 1.70% E) 2.31%

Expiration Corn Soybeans Pork Bellies TimeCents/Bushel Cents/Bushel Cents/Pound Today = spot 6 months 12 months 18 months 24 months 212 208 203 200 195 430 440 452 435 419 540 560 590 625 655