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Determine the convenience yield

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Question - The current price of a commodity is $75. The interest rate is 7% per annum and the storage costs are 1.75% per annum, all rates are continuously compounded. If the 2-year forward price of this commodity is $67.86, then determine the convenience yield?

a. 13.75%

b. 15.75%

c. 14.75%

d. 12.75%

e. 11.75%

Reference no: EM132882471

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