We witnessed a historic event in the commodity market in April 2020. The oil futures price...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
We witnessed a historic event in the commodity market in April 2020. The oil futures price plunged into negative. There are many reasons behind this puzzling phenomenon. Does our formula For=Soe(r-)T applicable to oil futures? If not, what are the other factors to consider when we price oil futures? Please give 2 factors apart from risk-free interest rate and current oil price, Time to Maturity We witnessed a historic event in the commodity market in April 2020. The oil futures price plunged into negative. There are many reasons behind this puzzling phenomenon. Does our formula For=Soe(r-)T applicable to oil futures? If not, what are the other factors to consider when we price oil futures? Please give 2 factors apart from risk-free interest rate and current oil price, Time to Maturity
Expert Answer:
Answer rating: 100% (QA)
Answer In summary while the formula for pricing futures contracts provides a foundational framework ... View the full answer
Related Book For
Basic Business Statistics Concepts And Applications
ISBN: 9780132168380
12th Edition
Authors: Mark L. Berenson, David M. Levine, Timothy C. Krehbiel
Posted Date:
Students also viewed these finance questions
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Case Swimmers Headphones1 Finally! Its the end of 2019 and you are sitting at your new desk in a plush office in north Bogota, with a delicious cup of Colombian coffee. You think about all it took to...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Two billiard balls of equal mass undergo a perfectly elastic head-on collision. If one balls initial speed was 2.00m/s, and the others was 3.00m/s in the opposite direction, what will be their speeds...
-
A mixing chamber has all flows at the same P, neglecting losses. A heat exchanger has separate flows exchanging energy, but they do not mix. Why have both kinds?
-
The authors of the paper Influence of Biofeedback Weight Bearing Training in Sit to Stand to Sit and the Limits of Stability on Stroke Patients (The Journal of Physical Therapy Science [2016]:...
-
In what circumstances may an amount be transferred from the revaluation surplus to retained earnings?
-
Wentworth Co. sold $3,000,000, 7%, 8-year bonds on January 1, 2014. The bonds were dated January 1, 2014, and pay interest on January 1. The company uses straight-line amortization on bond premiums...
-
Polygons, or multi-sided figures, have many shapes. Please match the name with its description. A polygon in [Choose ] which one or more interior angle has a measure greater than 180 A polygon in...
-
Bonds 1. Municipal Bonds - Municipal bonds are haircut per Exhibit 1 based on both their time to maturity and scheduled maturity at date of issue. 2. Corporate Bonds - Corporate bonds are haircut...
-
Fill in the missing amounts in each of the eight case situations below. Each case is independent of the others. (Hint: One way to find the missing amounts would be to prepare a contribution format...
-
In an epicyclic gear train of the sun and planet type shown in Fig. 15.33, the pitch circle diameter of the annular wheel A is to be nearly equal to 216 mm, and the module is 4 mm. When the annular...
-
The Tiwi Islands are a promising area of growth for the Northern Territory. A consortium designs a plan to build a bridge to the Tiwi Islands involving multiple stakeholders. The Northern Territory...
-
The output of bakers at The Cheesecake Palace depends on the number of bakers employed. The factory sells its cheesecake in a competitive product market for P = $10. The daily wage of bakers is...
-
What is Dinesh D'Souza's position on the impact of colonialization in Third World countries? What is Grameen Bank? According to Aneel Karnani, why are the benefits from Grameen Bank limited for LDCs...
-
Definitions: 9. Define the derivative f'(a). Discuss two ways of interpreting this number. 10. What is the relationship between continuity and the substitution method? 11. What does the squeeze...
-
The following information pertains to JAE Corp. at January 1,Year 2: Common stock, $9 par, 10,000 shares authorized, 2,000shares issued and outstanding $ 18,000 Paid-in capital in excess ofpar, com 2...
-
As indicated by mutual fund flows, investors tend to beat the market seek safety invest in last year's winner invest in last years loser
-
A survey was conducted of 665 consumer magazines on the practices of their websites. Of these, 273 magazines reported that online-only content is copy-edited as rigorously as print content; 379...
-
When do you use the hypergeometric distribution instead of the binomial distribution?
-
The file Homes contains information on all the single-family houses sold in a small city in the Midwestern United States for one year. The following variables are included: Price-Selling price of...
-
Baseline Petroleum, a successful efforts company, entered the oil and gas business in 2014 with the acquisition of one field. Baseline proved the field during 2014. At the end of 2014, prices were...
-
The CEO of Green Oil Company, Dwight Allen, gave a speech at the World Environmental Conference. In his speech, Mr. Allen spoke about Green Oils goal of doing no damage to the environment as a result...
-
Define the following: run ticket settlement statement thief gauging strapping Define the following and explain their relevance to oil and gas revenue accounting: Henry Hub West Texas Intermediate...
Study smarter with the SolutionInn App