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QI. On January 1, the spot price for $57 per barrel and the price of March oil future is 557.33 per barrel. The interest foregone
QI. On January 1, the spot price for $57 per barrel and the price of March oil future is 557.33 per barrel. The interest foregone per barrel is 80.06 and the cost of storing oil is $0.17 per barrel. The risk premium is $0.10 per barrel. a. What is the expected price of oil on the spot market in March? b. Show how futures price is related to spot price. c. Show how the spot price at expiration, answer in part a, related to the futures price today. d. Show how the expected futures price at expiration is related to futures price today
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