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Suppose you want to find the appropriate forward price on your milk goats for a year from now. The current market price for a milk
Suppose you want to find the appropriate forward price on your milk goats for a year from now. The current market price for a milk goats is $1320 and the one year risk free rate is 7%. Suppose you are able to sell the milk produced in 6 months for $600 and have maintenance costs at a rate of 4%. Also assume that the 6-month risk free rate is 4%. What is the appropriate forward price?
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