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Suppose that a continuous-time compounding frame-work is used with a fixed interest rate r . Suppose that the carrying charge per unit of time is

Suppose that a continuous-time compounding frame-work is used with a fixed interest rate r. Suppose that the carrying charge per unit of time is proportional to the spot price; that is, the charge is qS(t)

Show that the theoretical forward price of a contract with delivery data T is: image text in transcribed

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