The price of oil is $100 per barrel.Oil prices are expected to grow at 4% a year.The one-year risk-free rate of interest is 2% in simple terms.It costs $1 to store a barrel of oil for one year.If oil has no costs or benefits of carry,what is the theoretical one-year forward price of oil?
A) $100.00
B) $102.00
C) $103.02
D) $104.00
Correct Answer:
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