Alloyum Costs $0

question 14

Multiple Choice

Alloyum costs $0.10 per month to store (which is paid up front) but gives a convenience yield of $0.12 per month (which is received on the maturity date) .If Alloyum's spot price S is $200 per ounce and the continuously compounded interest rate r is 5 percent per year,then the six-month forward price is:

• A) $204.96
• B) $210.03
• C) $205.05
• D) $224.93
• E) None of these answers are correct.

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Definitions:

Intrinsic Motivation

The drive to engage in activities for their own sake, out of interest or enjoyment, rather than for an external reward.

Intrinsic Motivation

Internal drive that propels someone to act or perform tasks without the need for external reward or recognition.

Framing Effect

A cognitive bias where people decide on options based on whether they are presented in a positive or negative way.

Availability Heuristic

A cognitive shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method or decision.