The Forward Prices on a Barrel of Crude Oil Are

question 5

Multiple Choice

The forward prices on a barrel of crude oil are $112 and $118 in years one and two,respectively.The interest rates on zero coupon government bonds are 3.0% and 3.5% in years one and two,respectively.What is the likely 2-year swap price on a barrel of crude oil?

• A) $112.00
• B) $116.60
• C) $118.00
• D) $120.50

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