Question
The current price of GAP Inc. (GPS) stock is $8.50. You have $1,000 to invest and are able to borrow $1,000 at a 6% rate
The current price of GAP Inc. (GPS) stock is $8.50. You have $1,000 to invest and are able to borrow $1,000 at a 6% rate of interest with excellent credit. Based on the information above, what must the price of a 1-yr forward on GAP Inc.'s (GPS) stock be so that 'No Arbitrage' holds?
$8.01
$8.50
$9.01
$9.51
None of the above.
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The Handbook Of Equity Derivatives
Authors: Jack Clark Francis, William W. Toy, J. Gregg Whittaker
1st Edition
0471326038, 978-0471326038
