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Business, 13.05.2021 22:20 dbn4everloved

Suppose unleaded gasoline is currently trading at $3.30 per gallon. You face an interest rate of 5.6 percent and a carrying cost of $.06 per gallon per month. The current market price of a four-month futures contract on gasoline is $1.63 per gallon. You are evaluating a three-month carry trade opportunity. a. Determine the present value of the storage costs (PVSC). (Round your answer to 4 decimal places.) PV of storage costs
b. Identify what the futures price should be under spot-futures parity. (Do not round intermediate calculations. Round your answer to 3 decimal places.) Future price
c. Calculate the potential profit per gallon. (Round your answer to 2 decimal places.) Potential profit per gallon

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Suppose unleaded gasoline is currently trading at $3.30 per gallon. You face an interest rate of 5.6...
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