On September 26, the spot price of wheat was $3.5225 per bushel and the price of a
Question:
a. What is the expected price of wheat on the spot market in December?
b. Show how the futures price is related to the spot price.
c. Show how the expected spot price at expiration, your answer in part a, is related to the futures price today.
d. Show how the expected futures price at expiration is related to the futures price today.
e. Explain who earns the risk premium and why.
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Related Book For
Introduction To Derivatives And Risk Management
ISBN: 9781305104969
10th Edition
Authors: Don M. Chance, Robert Brooks
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