A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year risk-free rate is 3.25%.
The 1-year oil futures price should be equal to ________.

Name: A 1-year oil futures contract is selling for $74.50. Spot oil prices are $68, and the 1-year risk-free rate is 3.25%. The 1-year oil futures price should be equal to ________.
Brand: Quizplus
Rating: 4.8 (57 reviews)

Question

Quizplus · Accepted Answer

Parity F₀ = S₀(1 + r_f − d)^T = $68(1 + 0.0325 − 0)1 = $70.21

A 1-Year Oil Futures Contract Is Selling for $74