Question
Suppose the spot price of winter wheat is $5.98 per bushel. Storage costs are $0.08 per bushel every 3 months and are payable in advance.
Suppose the spot price of winter wheat is $5.98 per bushel. Storage costs are $0.08 per bushel every 3 months and are payable in advance. The interest rate is 3 percent per year with continuous compounding. Assume that winter wheat is a pure consumption commodity. Suppose the actual quoted price for a 6-month forward contract is $6.18 per bushel. Whats the implied convenience yield, y, of winter wheat?
Please keep at least 4 decimal places during your work process. Round the FINAL number solution to 4 decimal places.
Your answer: _________________.
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