Long corn futures can help corn buyer to avoid paying storage cost. true or false An...

Long corn futures can help corn buyer to avoid paying storage cost.

true or false

An inverse term structure is often associated with a recession.

true or false

Treasury bill rate, Treasury bond’s yield to maturity, LIBOR, and repo rate are all good indicators for risk-free rate for pricing derivatives’ purpose.

true or false

Solutions

Expert Solution

1. The given statement is FALSE as corn buyer does not need storage cost and it is mostly associated with the corn producer.

2. The given statement is TRUE because inverse term structure is is reflection of an impending recession.

3. The given statement is TRUE because LIBOR is also used along with these government securities in order to determine the risk free rate while taking exposure of derivative purpose.

jeff jeffy answered 2 years ago

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