Question
Suppose you buy a one-year forward contract at $65. At expiration, the spot price is $73. The risk-free rate is 10 percent. What is the
Suppose you buy a one-year forward contract at $65. At expiration, the spot price is $73. The risk-free rate is 10 percent. What is the value of the contract at expiration?
ANSWER is 8, I don't just say 73-65=8 please. I want to know why you don't use risk free rate.
I was using this formula: V_t (0, t) = S_t - [ F(0, t) ((1+r)^(-(T-t))) ]
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Restaurant Financial Management
Authors: Hyung-il Jung
1st Edition
1774631431, 978-1774631430
