What is a fair price for a one year forward contract

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Reference no: EM131315478

1. A certain commodity sells for $150 today. The present value of the cost of storing this commodity for one year is $10. The risk-free rate is 4 percent. What is a fair price for a one-year forward contract on this asset?

2. The spot exchange rate is $1.6666/£. The risk-free rate is 4 percent in the United States and 6 percent in the United Kingdom. What is the forward exchange rate (assume a one-year contract)?

Reference no: EM131315478

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