Question
The relationship between spot and futures prices for consumption commodities, such as pork, orange juice, oil, bitcoin, or lumber, etc. can be described by a
The relationship between spot and futures prices for consumption commodities, such as pork, orange juice, oil, bitcoin, or lumber, etc. can be described by a family of convenience-yield pricing models that take the following general form F0 = S0e (r+uy)T , (2) where r represents the interest rate, u represents the costs to buy and hold the physical commodity such as storage, insurance, and transportation costs, and y represents the convenience yield. All are expressed in % per annum. Apply this model to explain how oil prices can actually go negative. . Be sure to use the future pricing model as an anchor to your response
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