We witnessed a historic event in the commodity market in April 2020. The oil futures...
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We witnessed a historic event in the commodity market in April 2020. The oil futures price plunged into negative. There are many reasons behind this puzzling phenomenon. Does our formula 0,=0 (r)T applicable to oil futures? If not, what are the other factors to consider when we price oil futures? Please give 2 factors apart from risk-free interest rate and current oil price, Time to Maturity (Hint: Our textbook is helpful. The question DOES NOT ask you why the price turns negative.)
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