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Today refers to the 2/26/16 Wall Street Journal. (The answers would be the same if today were 05/19/21) Futures prices are related to the following:
Today refers to the 2/26/16 Wall Street Journal. (The answers would be the same if today were 05/19/21) Futures prices are related to the following: spot price, cost of carry (financing cost + storage cost) & convenience value. Fill out the boxes in columns (b), (c) & (d) of the table below to indicate whether these costs are positive (+), negative (1) or zero (0) by placing +, - or 0 in the appropriate box where Column (a) represents the Financing Cost (FC) in a cash & Carry arbitrage. Since the FC is a cash outflow, this column is all + as shown. Column (b) represents the Storage Cost (SC) in today's market. Column (C) represents the sum of these costs (FC + SC) in today's market. Column (d) represents the Convenience Value in today's market. NOTE: Cash Outflows are positive (+) costs: Cash Inflows are negative (-) costs. In column (e), indicate whether the market structure of the futures contracts on these commodities, as evidenced by the prices today, are in contango or backwardation by placing a Cor B in column (e) (a) (6) (c) 0) (d) (e) Commodity Financing Cost Storage Cost Convenience Value Market Structure Financing Cost + Storage Cost GOLD SP500 BONDS COPPER - For the T-bond futures contract, the answers to columns (b), (c), (d) and (e) are respectively For the T-bond futures contract the answers to columns (b) (c), (d) and (e) are respectively 0B 02-08 + +0
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