The lease rate on the 6-month soybean contract is 0.35%. What is the implied annual storage cost if the cost is continuously paid and proportional?
A) 1.0%
B) 2.0%
C) 3.0%
D) 4.0%

Question

Quizplus · Accepted Answer

The implied annual storage cost is 2 times the lease rate, which is 0.35% * 2 = 0.7%. Since the cost is continuously paid and proportional, the annual storage cost is 0.7% * 12 = 8.4%.

The Lease Rate on the 6-Month Soybean Contract Is 0