Question: Consider a forward contract on a commodity with a current price of $550 and delivery time in 12 months. Assume that the risk-free rate of

Consider a forward contract on a commodity with a current price of $550 and delivery time in 12 months. Assume that the risk-free rate of interest is 8% compounded monthly. The carrying cost is $8 per month paid at the beginning of each month. Assume that today is the beginning of a month, and the carrying cost payment has not been made yet.

a) Find the forward price of the commodity for delivery in 12 months:

b)Find the forward price of the contract 6 months from now if the commodity is traded at $600 at that time:

c) What is the value of the contract 6 months from now?

The contract value is $

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