When Answering the Questions Below, Refer to the Following Table

question 20

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 18-month soybean forward contract?

• A) 0.69%
• B) 1.21%
• C) 1.69%
• D) 2.31%

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