You trade gold futures. The price of one ounce of gold is $1000. The interest rate is 0%. The annual storage cost of gold is $20 per ounce per year. There are two gold futures contracts. First expires in 1 year from now and the second in 2 years from now. What are the fair prices of these two contracts?

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Fair Prices of Gold Futures Contracts Scenario Gold price per ounce 1000 Interest rate 0 Annual stor... View the full answer