Question
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)?
what is the method to finding how much it costs to store it ?
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30 Days To Taming Your Finances What To Do To Better Manage Your Money
Authors: Deborah Smith Pegues
1st Edition
0736918361, 978-0736918367
