Question: Problem 2. Pricing futures: (20 points) (a) . Consider a 6-month futures contract on a financial asset with dividend yield per year. Risk free rate

 Problem 2. Pricing futures: (20 points) (a) . Consider a 6-month

Problem 2. Pricing futures: (20 points) (a) . Consider a 6-month futures contract on a financial asset with dividend yield per year. Risk free rate is 10% per year. Current value of an asset is. What should be the 6-month futures price on this asset, if there is no convenience yield and storage costs? Price (b) "s) The spot price of silver is $25 per ounce. The storage costs are 0.5% per year. Assuming that interest rates are 5% per annum calculate the futures price of silver for delivery in 9 months. (both storage costs and interest rate are continuously compounding). Price

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