elizabethcswind3272 elizabethcswind3272

04-08-2024
Business

Answered

A farmer is preparing to plant corn and expects to deliver his crop to the market in 1 year. The yield on US t-bills is 2.1% and it costs 0.5% to store corn for 1 year. If the spot price of corn is $3.17/ bushel today, what price can the farmer expect to lock in with a 1 year futures contract? (Hint: Be sure to use continuous compounding.)

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