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

Assignment Help Business Economics
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.

Reference no: EM13978710

Questions Cloud

What is the strength and direction of the magnetic field : What is the strength and direction of the magnetic field halfway between the wires? What is the strength and direction of the magnetic field a distance 1 cm below the bottom wire?
What are forward price and initial value of forward contract : A stock is expected to pay a dividend of $1 per share in two months and in five months. The stock price is $50, and the risk-free rate of interest is 8% per annum with continuous compounding for all maturities. An investor has just taken a short posi..
Determine the distance that wire should be mounted : Determine the distance that wire 1 should be mounted above wire 2 in order for it to be held in place by magnetic repulsion.
Display a prompt indicating that the input was invalid : The employee ID shall be generated by adding 1 to the largest employee ID already in the employee memory object (or employee.txt data file).
What is an upper bound for the one-year futures price of oil : 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 futu..
Compounded quarterly or borrowing money from a bank : You have a choice of borrowing money from a finance company at 24 percent compounded quarterly or borrowing money from a bank at 26 percent compounded annually. Which alternative is the most attractive? If you can borrow funds from a bank at 26% comp..
How much water diversion capacity does tom build : Draw graphs of both the PDF (g(•)) and CDF (G(.)) of Strawberry Creek's annual flow. Be precise with your axes. How much water diversion capacity does Tom build?
What are forward price and value of the forward contract : A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $38 and the risk-free rate of interest is 8% per annum with continuous compounding. a) What are the forward price and the initial value of the for..
How effective is cbt compared to drug therapy : What are the theories and techniques behind each evidence-based treatment? What mechanisms appear to make the treatment effective? How effective is CBT compared to drug therapy in treating GAD

Reviews

Write a Review

Business Economics Questions & Answers

  Consider a couple decision about how many children to have

Consider a couple's decision about how many children to have. Assume that over a lifetime a couple has 200,000 hours of time to either work or raise children.

  Firms average total cost of producing 101 units

Illustrate what is the firm's average total cost of producing 100 units. Illustrate what is the firm's average total cost of producing 101 units.

  Provided by the forecasting team indicates demand forecast

HMK is a handbag making company. They have a forecasting team which provides them thedemand forecast for their product. The report provided by the forecasting team indicates the demand forecast for the next 6 months. It takes a handbag maker 15 minut..

  Calculate socially optimal level of output for each firm

Suppose you work as research economist at the EPA. There are two firms that operate in a perfectly competitive marker. This implies that each has the same marginal benefit curve, which in this case is horizontal at MB= $100. Now calculate that social..

  Provide an explanation of your position

Take a position on whether or not companies benefit from using a structured profit approach to calculate their profits. Provide an explanation of your position with at least two examples or scenarios of the use of such an approach.

  Consider partial factor tax on capital used in food industry

Imagine a world with two goods, food (F) and shelter (S), and two factors of production, labor (L) and capital (K). Assume that labor and capital can be employed in either sector of the econ omy (the food sector or the shelter sector) and that these ..

  What amout of bonds will it issue

What will be the government deficit. If the government finances the deficit by issuing bonds, what amout of bonds will it issue?

  How much control might an organization have over pricing

How much control might an organization have over pricing based on a product's elasticity. Discuss which of elasticity rules you used to determine your answer.

  Suppose market for good x has four-firm concentration ratio

Suppose the market for good X has a four-firm concentration ratio of 0.50. Furthermore, assume that total sales in the industry are $1.2 million. Based on this information, we know that sales for the largest four firms in the industry equal (in aggre..

  Used piece of furniture-income of drug dealer

Which of these transactions do not get counted in GDP--sale of a used piece of furniture, income of a drug dealer, income of your teenage babysitter, daycare services, services of a doctor, a condo built in 2004 resold today, purchase of a brand new ..

  Same premium based in the average risk

Suppose one insurance company decided to charge teenagers and adults the same premium based in the average risk of an accident among both groups.

  With a focus on the concepts introduced in granovetter

With a focus on the concepts introduced in Granovetter (2005), write a brief (1-page) essay comparing his discussion of the Fur of Sudan and Arab merchants with the description in TechCrunch1 of the tech-funding needs in London and the arrival of Sil..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd