Question
The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding. The asset provides an
The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding. The asset provides an income of $3 at the end of the first year and at the end of the second year. What is the three-year forward price? (Hint: First find the PV of year 1 and year 2 incomes and then subtract it from the spot price.)
| 19.67 | ||
| $33.46 | ||
| $45.15 | ||
| $40.50 |
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Corporate Finance Core Principles and Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
3rd edition
978-0077971304, 77971302, 978-0073530680, 73530689, 978-0071221160, 71221166, 978-0077905200
