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Suppose that on September 25, it costs 6 cents per bushel per month to store wheat, and the current cash price for wheat is $4.795
Suppose that on September 25, it costs 6 cents per bushel per month to store wheat, and the current cash price for wheat is $4.795 per bushel. The futures price 6 months out is $5.225. According to the full carrying cost hypothesis, is there any opportunity for profit? If so how much for one contract? (Contract size is 5,000 bushels)
A. | No- there is no opportunity for a profit. | |
B. | YES- there is an opportunity to earn $150 in profit. | |
C. | YES- there is an opportunity to earn $300 in profit. | |
D. | YES- there is an opportunity to earn $350 in profit. |
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