Provide an estimate of the convenience yield y

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Question: Assume the cost to store a barrel of oil is $1.00 per month. Using the current spot price, and assuming that interest rates are 1.00% p.a., is the oil future priced accurately in the market? If the prices are out of line, please provide an estimate of the convenience yield y. What does this tell you about the current state of the oil market?

Reference no: EM133331777

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