what was the answer for the gold future ? was it 894 ? the Q was something abt stroage costs, convienience yiled etc
i answerd 894 yes. dunno if its right.
can’t remember what #s were in the Q. does any one remember ? don’t think this was discussed in any earlier thread
Pretty sure it was 894. The futures price came out to ~898 and the cost of carry was -4 ( = 2 - 6 convenience yield). I thought 902 was the trap answer and 894 correct. Just my opinion.
Cost of carry question, include interest or no?
deviarun Wrote: ------------------------------------------------------- > what was the answer for the gold future ? was it > 894 ? > the Q was something abt stroage costs, > convienience yiled etc Answer A was derived by subtracting the net benefit from the SPOT price - clearly wrong Answer B was derived by subtracting the net benefit from the calculated future price - OK Answer C - I couldn’t even figure out how they got this but it clearly didn’t make sense given the rate, spot price, and net benefit.
yes - should add the future value of net costs so should have been S(1+rf)^t + FV (Costs - benefits) 894 was choice B but i cant remember whether FV or PV of costs & benefit #s were provided in the Q