1. Select all the market conditions that apply to the situation below. An asset's spot price is $78/unit and its expected 90-future spot price reflects $6/unit storage costs, $1/unit net interest, and $3/unit risk premium. The asset's 90-day forward price is $85/unit.
Backwardation
Normal backwardation
Contango
Normal contango
(Must pick two options)
2. You purchase one share of stock for $67.30. One year later, you receive a dividend of $4.60 on the share and then sell the share for $66.90. Calculate the dividend yield.
3. A stock's current price is 79 and it has declared dividends of $1.3/share each to be paid in 38 days, 158 days, and 278 days from now. Price a 300-day forward contract assuming that the risk free rate is 2%. Provide the forward price rounded to two decimals.