Suppose that todays spot price for 1 troy ounce of platinum is $1000. The owner of the platinum bar in the approved warehouse has to pay $0.01 per troy ounce per day for storage. FYI, the underlying of one platinum futures is 50 troy ounces. Answer the following questions by writing the final answer only.

1). Suppose the market interest is zero so that anyone can borrow money without any interest. Therefore, the only cost of carry for the platinum futures is the daily storage charge. What would be the fair market value of one contract of this platinum futures expiring in 60 days in terms of USD, rounded to the nearest dollar if necessary?

Answer:

2). Suppose the market interest is zero so that anyone can borrow money without any interest. What would be the contract value of March 2021 May 2021 calendar spread of this future? FYI, if you buy 1 calendar spread, you are buying one contract expiring in March 2021 while simultaneously selling one contract expiring in May 2021. Assume 60 days between the expiration dates for each contract (30 day convention for each month). Suppose that the short position can deliver the underlying at the first day of the expiry month.

Answer:

3). In addition to the storage cost, suppose now the market interest is 1 basis point simple interest every day. What would be the fair notional value of one contract of platinum futures expiring in 60 days in terms of USD, rounded to the nearest dollar if necessary? (FYI, simple interest means that there is no interest accrued on interest. That is, if I borrowed $100, I would pay $0.01 interest every day without any change in the amount of principal.)

Answer: