Question
The spot price of copper is $3.50 per pound. The carry cost for copper is 3.2% and the current risk free rate is 2.2%, both
The spot price of copper is $3.50 per pound. The carry cost for copper is 3.2% and the current risk free rate is 2.2%, both rates are annual with continuous compounding for 6 months. The future price is $3.55 for delivery in 6 months.
What is the convenience yield of copper?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the convenience yield of copper we can use the formula for commodity futures pricing wh...
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Step: 2
Step: 3
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Valuation The Art and Science of Corporate Investment Decisions
Authors: Sheridan Titman, John D. Martin
3rd edition
133479528, 978-0133479522
