Question: Question:If someone can help me with my assignment I will really appreciate it. I know the right answer but I don't know how to get

Question:If someone can help me with my assignment I will really appreciate it. I know the right answer but I don't know how to get it; i need explanation.THANKS!!

Questions

The price of oil is $48.34 per barrel and the interest rate is 1%.

(a) What is the futures price for a contract with 12 months until maturity?(Ans:48.83)

(b) If the actual futures price for the DEC 2016 contract is $47.98, what type of trade involving oil and oil futures would be profitable?

2. A stock is currently $20. In six months it will be worth either $16 or $24. The interest rate is 2%

(a)What is the value of a call option with a strike price of $21? (Ans: $1.56)

(b)What is the value of a call option with a strike price of $20?(Ans: $2.08)

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