Homework answers / question archive / Consider a 12-months futures contract on silver

Consider a 12-months futures contract on silver

Finance

Share With

Consider a 12-months futures contract on silver. Assume no income and that it SX per ounce per year to store silver, with payment being made at the end of the war. The spot price is $26 per ounce and the risk free rate is 4% per annum for all maturities, based on continuous compounding. The futures price of the 12-, month futures contract on silver is $29 per ounce. Assume that no arbitrage 7.4 Futures-Spot parity with storage costs holds. The storage cost per ounce per year 

• 
b. C. d. e. 
$1.86 $1.94 $3.00 $2.15