Question: iv . Consider a forward contract on gold. Suppose that there is fixed storage cost of $c per ounce, paid at the end period and

iv. Consider a forward contract on gold. Suppose that there is fixed storage cost of $c per ounce, paid at the end period and c is the same for any time period less than one year. Let St be the spot price of one ounce of gold at time t and r be the continuously compounded risk-free rate of interest which is assumed to be constant. Derive the price at time t of a forward contract written one ounce of gold at the start of the start of the year, with maturity T year (T<1)

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