When Answering the Questions Below, Refer to the Following Table

question 1

Multiple Choice

When answering the questions below, refer to the following table of commodity forward and spot prices. The annual risk free interest rate is 4.0%.
$$\begin{array} { l c c c } \begin{array} { r } \text { Expiration } \\\underline {\text { Time }}\end{array} & \begin{array} { c } \text { Pork Bellies } \\\underline {\text { cents/pound }}\end{array} & \begin{array} { c } \text { Com } \\\underline {\text { cents/bushel }}\end{array} & \begin{array} { c } \text { Soybeans } \\\underline {\text { cents/bushel }}\end{array} \\\text { Today=spot } & 540 & 212 & 430 \\6 \text { months } & 560 & 208 & 440 \\12 \text { months } & 590 & 203 & 452 \\18 \text { months } & 625 & 200 & 445 \\24 \text { months } & 655 & 195 & 437\end{array}$$
-What is the approximate annualized lease rate on the 12-month corn forward contract?

• A) 0.00%
• B) 2.25%
• C) 4.50%
• D) 8.25%

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