If the spot price for platinum is $979.15 per ounce, what should the futures contract price be for a three-month contract at an annual interest rate of 3%?
A)$963.93
B)$973.82
C)$979.15
D)$986.41
E)$1,036.45

Question

Quizplus · Accepted Answer

The futures contract price accounts for the cost of carry, which includes storage costs and the interest cost of holding the commodity until the future date. Here, with an annual interest rate of 3%, for three months (or 0.25 years), the calculation is: $979.15 * (1 + 0.03 * 0.25) = $986.41.

If the Spot Price for Platinum Is $979