What is the current 1-year forward price

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The current price of soybean meal is $193.10 per ton. The current interest rate is 4.12% per year. The holder of soybean meal does not receive any direct cash payments from holding the asset, but does have to pay storage costs. Storage costs routinely run $5.00 per ton, per year. Unfortunately, the holder of soybean meal derives no extra benefit (convenience) from holding the asset.

A. What is the current 1-year forward price for one ton of soybean meal?

B. Suppose you entered 5 forward contracts to purchase soybean meal at the price determined above. Six months later, however, you decide you will no longer need any soybean meal. Given that 6-month forwards currently

Reference no: EM132899016

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