2. Explain, using yields (not known cost or income), how the cost of carry is defined for a
forward contract on an…:
a) Investment asset
b) Exchange rate
c) Oil price
3. Go to CME Group’s webpage and look up the quotes for futures contracts on crude oil futures (Crude Oil Futures Quotes - CME Group). Assess whether the forward market is in contango or backwardation (motivate why you answered the way you did!) Provide a possible reason why the forward curve looks this way in light of your answer in question 2 c.
4. Explain, verbally, the comparative advantage-argument as it relates to a fixed-for-fixed currency swap. Make sure to specify the source of the gain. You do not have to provide a fictive example, but you can if it helps you answer.
