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The one-year futures price of a storable commodity is today $1.95/unit while the spot price today is $1.96/unit. You know that the cost of carry
The one-year futures price of a storable commodity is today $1.95/unit while the spot price today is $1.96/unit. You know that the cost of carry for this commodity is 10%. Is this commodity a consumption asset? What is the convenience yield of this commodity today? What does the cost of carry represent? If you know that the appropriate risk-free rate today is 9% and the commodity is wheat can you find how much it costs to store it (please be specific about the units of this cost)?
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