question on 1-year gold fwd price
Suppose that the 1-year gold lease rate is 1.5% and the 1-year risk-free rate is 5%. Both rates are compounded annually. You entered into a forward contract with a hedger whereby you agree to buy large amounts of gold at fixed price (F). What is the maximaum 1-year gold forward price you should quote to the gold-mining company when the spot price is 600$ ? |