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EoC Vol.5 R.38 (P.203-)

commodity forwards
why we borrow at Q1 & 3, and why we do NOT borrow at Q2?

kurmanal Wrote:
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> In the 2nd question are calculating what the
> risk-free rate should be to borrow the funds..
>
> In the other questions, are given that rate..

You mean what is the risk-free rate implied in the forward price ? If so, I get it.

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sorry, I missed "we" in both sentences.. %)

yes, that is the implied rate in the forward price..to avoid any arbitrage

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