Implied interest rate for the first six months, Finance Basics

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Implied interest rate for the first six months

Problem:

Suppose the spot price of gold is $1200 per ounce. The futures price for delivery in six months is $1208, while the futures price for delivery in one year is $1214. The interest rate on 6-month loans is 1.00percent (on an annual basis).

Required:

Question: What is the implied interest rate for the first six months?

Note: Provide support for your rationale.

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Finance Basics: Implied interest rate for the first six months

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Finance Basics: Implied interest rate for the first six months

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