8. Assume that the spot price of crude oil is $20 a barrel and the annual interest rate equals 4%. The cost of storing and insuring oil for one year is 1%. (a) What is the price of the 1- year forward...

8. Assume that the spot price of crude oil is $20 a barrel and the annual interest rate equals<br>4%. The cost of storing and insuring oil for one year is 1%. (a) What is the price of the 1-<br>year forward contract for crude oil? (b) What should you do if the forward crude oil price<br>is $20? (c) What if the crude oil forward price is $25?<br>

Extracted text: 8. Assume that the spot price of crude oil is $20 a barrel and the annual interest rate equals 4%. The cost of storing and insuring oil for one year is 1%. (a) What is the price of the 1- year forward contract for crude oil? (b) What should you do if the forward crude oil price is $20? (c) What if the crude oil forward price is $25?

Jun 07, 2022

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8. Assume that the spot price of crude oil is $20 a barrel and the annual interest rate equals 4%. The cost of storing and insuring oil for one year is 1%. (a) What is the price of the 1- year forward...

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