Derivatives Q80

0. For a given asset, the spot price is 100, the interest rate is 10%, the storage cost for one year is 5, and the benefit of holding the asset for one year is 2. The one-year forward contract will most likely be priced at:

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Option : A
Explanation : An asset’s forward price is spot (1 + r) + costs – benefits = 100 * 1.1 + 5 – 2 = 113.

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