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A.) Forward Contract Price, A US stock paying no dividends is trading in US$ for $55.20 and the annual US interest rate is 1.25% with

  1. A.) Forward Contract Price, A US stock paying no dividends is trading in US$ for $55.20 and the annual US interest rate is 1.25% with annual compounding. Based on the current stock price and the no-arbitrage approach, what is the equilibrium three-month forward price? B.) If the interest rate immediately falls to 25 bps to 1.00%, what is the impact on the three-month forward price?

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