Question 7

Stock A is a non-dividend paying stock. You just bought Stock A forward, with maturity 5 years. At

the moment, the 5-year risk free spot rate is 2.53% while the expected Stock A return is 7 .8%. lf Stock A's spot price is 12 USD. What is Stock A forward price?

Consider the information in Question 7. After two years, Stock A's spot price is 15 USD, its expected return is 15.00% and the 3-year spot zero risk-free rate is 4.56%

What is the mark-to- Market of the forward contract you entered in two years before? /-(-

A) 3.11

B) 1.32

c) -1.32

d) -3.11

C) -1.32

D)-3.11