### What is an upper bound for the one-year futures price of oil

##### Reference no: EM13978710

The spot price of oil is \$110 per barrel and the cost of storing a barrel of oil for one year is \$3.25, payable at the end of the year. The risk-free interest rate is 6% per annum, continuously compounded. What is an upper bound for the one-year futures price of oil? Explain.

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