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Suppose that: (i) the spot price of wheat today is $10.00 per bushel, (ii) markets are frictionless, (iii) the interest factor for borrowing and lending

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Suppose that: (i) the spot price of wheat today is $10.00 per bushel, (ii) markets are frictionless, (iii) the interest factor for borrowing and lending over the next six months is 10%, and (iv) the convenience yield for holding wheat is zero. Arbitrage opportunities are absent. The forward price for wheat will be equal to $11.00 if wheat is available for storage at zero cost The forward price for wheat will equal $9.10 if wheat is available for storage at $0.90 per bushel (payable upon delivery, in six months). The forward price for wheat will be less than $10.00 if wheat is available for storage at zero cost The forward price for wheat will equal $10.90 if wheat is available for storage at $0.90 per bushel (payable upon delivery, in six months). Cannot be determined

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