The spot price of wheat is $2.90/bushel.The one-year futures price is $3.00/bushel.If the risk-free rate is 5%,calculate the net convenience yield.

Question

Quizplus · Accepted Answer

The net convenience yield is the difference between the futures price and the spot price, divided by the spot price and multiplied by the risk-free rate. In this case, the net convenience yield is (3.00 - 2.90) / 2.90 * 0.05 = 0.016.

The Spot Price of Wheat Is $2