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The current spot price for corn is 4.431 per bushel. You are long 10,000 forward contracts that expire in one quarter. The forward price is
The current spot price for corn is 4.431 per bushel. You are long 10,000 forward contracts that expire in one quarter. The forward price is 4.525 per bushel.
a.) What is the risk-free rate (expressed however you want) implied by these prices?
b.) What is your profit if the actual spot price for corn one quarter from now is 4.802 per bushel?
c.) If instead you were short 10,000 forward contracts, what would your profit be if the price for corn one quarter from now is 4.318 per bushel?
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