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Determining the convenience yield

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The following table presents the spot prices of the risk-free interest rate market. The spot price of gold is $ 425 per ounce. If the gold storage cost is 0.15% per year and the convenience yield is a fixed 1%.

Complete the following table of gold prices and commodity swap rates.

Maturity(t)

Spot Rate

Foward Price

Swap Rate

1

0.03

 

 

2

0.035

 

 

3

0.04

 

 

4

0.043

 

 

5

0.045

 

 

Reference no: EM133059719

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