For commodity futures, (Futures price)× (1 + r_f)^t = spot price − net convenience yield.

Question

Quizplus · Accepted Answer

The correct relationship for commodity futures pricing, considering interest rates and convenience yield, is: Futures price = (Spot price - Net convenience yield) × (1 + r)^t, where r is the risk-free interest rate and t is the time to maturity. The formula provided in the question is not a standard or recognized formula for futures pricing.

For Commodity Futures, (Futures Price)× (1 + Rf)^t = Spot

For Commodity Futures, (Futures Price)× (1 + R_f)^t = Spot