The price of two-month futures contract of oil is 121000 (per 1000 kg) and the spot price is 120000 (per 1000 kg). If the investor can continuously borrow at 8.65 percent per annum compounded continuously and U = 0.25 (percent per 1000 kg). Find out the theoretical price based on cash and carry/reverse cash and carry model. Also find out the convenience yield in absolute and percentage term.

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