Computation of the forward contract at given risk free rate

Reference no: EM1315681

Assume that current spot price of Brent oil is $82 and 9-month risk-free rate of return is 4 percent. The continuous storage cost of oil is 3 percent per year. Let's assume also that oil has a convenience yield of 2.5 percent. Calculate the price of a 9-monht forward contract on a barrel of oil.

Reference no: EM1315681

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