The spot price of corn is $15 per bushel. It costs 5 per cent per year to store corn, including any wastage. The 6 and 9 month interest rates are 2 per cent per year and 2.5 per year, respectively. There is no convenience yield on corn. What are the 6 and 9 month fair values for the futures contracts? What is the spread on these futures contracts?

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To determine the fair values of the 6 and 9month futures contracts for corn and calculate the spread ... View the full answer