| Type of underlying | Interest rate(CC) | Storage cost | Dividend | Lease(L)/ CY | Time to maturity | Forward price |
| Stock | 5% | – | – | – | 6M | |
| Commodity | 6.5% | – | – | – | 3M | |
| Stock | 7% | Y= 2% | 6M | |||
| Stock | 6% | A=$25 due in 3 months | 12M | |||
| Stock | 10% | A=$25 due in 6 months | 3M | |||
| Commodity | 3% | 3% | – | – | 3M | |
| Commodity | 5% | $100 paid in advance | 6M | |||
| Commodity | 6% | $50 paid at the end of contract | CY=1% | 6M | ||
| Commodity | 2% | $50 paid at the end of 3 months | CY = 2% | 6M | ||
| Commodity | 4% | $10 Paid every month (at the start of the month) | 6M | |||
| Commodity | 2.5% | $10 paid every month (at the end of month) | 6M | |||
| Commodity | 6% | L=3% | ||||
| Commodity | 1% | $20 paid in advance | CY = 5% |
Note: CC = Continuously compounded. CY = Convenience Yield, Y = Yield form, A = Amount, M = months.
Introduction (Relevant for FRM Exam) Every once in a while, a financial disaster unfolds that becomes a case study, providing valuable lessons for future generations. The story of Metallgesellschaft’s hedging disaster is one such example. This German conglomerate’s misadventure in the oil markets in the United States resulted in one of the most notable disasters
Margin Call (2011) Reason To recommend: Movie starts from the Risk management department of investment bank and revolves around forecast made by risk management and the decisions taken by board of investment bank. After watching this movie, you will understand the importance of risk management department. Related FRM Topic: General Risk Management Profession (No direct
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