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Suppose the spot price of heating oil is 1.618 per gallon and the March futures price for heating oil is 1.621 per gallon. If you
Suppose the spot price of heating oil is 1.618 per gallon and the March futures price for heating oil is 1.621 per gallon. If you know the interest rate is 2.0% and the storage cost of heating oil is 1.2% of its value (both continuously compounded) and that there are 45 days left until maturity, what can you infer about the heating oil market right now? Do you think the market might look any different in June than it does now?
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