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Intro A non-dividend-paying stock is currently worth $77. A forward contract on the stock expires in 0.8 years. The T-bill rate is 4% (continuously compounded)
Intro A non-dividend-paying stock is currently worth $77. A forward contract on the stock expires in 0.8 years. The T-bill rate is 4% (continuously compounded) for all maturities. Part 1 Attempt 1/4 for 10 pts. What is the forward price? Part 2 Attempt 1/4 for 10pts. Initially, what is the value of the forward contract to the long position? Part 3 Attempt 1/4 for 10pts. 0.1 years later, the stock has fallen to $70.91. What is the new forward price (interest rates are unchanged)? Part 4 Attempt 1/4 for 10pts. What is the value of the forward contract to the long
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