The forward price of wheat for delivery in three months is $7.90 per bushel, while the spot
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The forward price of wheat for delivery in three months is $7.90 per bushel, while the spot price is $7.60. The three-month interest rate in continuously compounded terms is 8% per annum. Is there an arbitrage opportunity in this market if wheat may be stored costlessly?
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The spot price of wheat is 360 Since there are no storage costs we compute the theoretical forward p...View the full answer
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