A one-year long forward contract on crude oil is entered into when the spot price is $60/bbl.
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A one-year long forward contract on crude oil is entered into when the spot price is $60/bbl. and the risk-free rate of interest is 2.00% per annum with continuous compounding. The cost to store a barrel of oil is $2.00 per barrel per year, payable at the end of the year. Please assume there is no convenience yield. What is the theoretical forward price?
Related Book For
Basic Marketing Research
ISBN: 978-1133188544
8th edition
Authors: Tom J. Brown, Tracy A. Suter, Gilbert A. Churchill
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