1. Explain carefully why the futures price of gold can be calculated from its spot price and other observable variables whereas the futures price of copper cannot.
2. Explain carefully the meaning of the terms convenience yield and cost of carry. What is the relationship between futures price, spot price, convenience yield, and cost of carry?
3. Explain why a foreign currency can be treated as an asset providing a known yield.
4. Is the futures price of a stock index greater than or less than the expected future value of the index? Explain your answer.