UGM June 2019 Q24
- Option : C
- Explanation : Assuming that the storage cost is paid at the end of the month, reverse cash and carry would produce the following cash flows at the end of a one month period:
Sale proceeds of one barrel at spot price = $70.
Plus one month interest earned at 6 percent on $70 = $0.35.
Plus one month storage cost saved = $0.60.
Thus the total cash flow at the end of one month from reverse cash and carry would be 70.00 + 0.35 + 0.60 = 70.95.
