Business, 06.03.2020 01:36 melanie7152
A 1-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $40 and the risk-free rate of interest is 10% per annum with continuous compounding.
(a) What are the forward price and the initial value of the forward contract?
(b) Six months later, the price of the stock is $45 and the risk-free interest rate is still 10%. What are the forward price and the value of the forward contract?
Answers: 2
= 44.21
= $47.31Another question on Business
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A 1-year long forward contract on a non-dividend-paying stock is entered into when the stock price i...
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