You have been asked to construct an oil contract that has the following characteristics: The initial cost
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You have been asked to construct an oil contract that has the following characteristics: The initial cost is zero. Then in each period, the buyer pays S − F, with a cap of $21.90 − F and a floor of $19.90 − F. Assume oil volatility is 15%. What is F?
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Since the contract has zero value it doesnt matter which side of the con...View the full answer
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