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Compounded risk-free rate

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Reference no: EM131182024

Suppose the gold spot price is $1700/oz, the 1-year forward price is 1760.54, and the continuously compounded risk-free rate is 4%. Calculate the following:

a. the lease rate

b. the return on a cash-and-carry if gold cannot be loaned

c. the return on a cash-and-carry if gold is loaned and it earns the lease rate

Reference no: EM131182024

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