Question
To trade in stocks, a brokerage commission of 1% of the stock price is charged. However, if you buy the stock and later sell it,
To trade in stocks, a brokerage commission of 1% of the stock price is charged. However, if you buy the stock and later sell it, or you short sell the stock and later buy, assume that you pay the brokerage commission only one time at the beginning. If the stock price is $75 and the continuously compounded interest rate is 5%, what is arbitrage free price range of the nine-month forward price?
In the above problem, if the brokerage commission is 1.25%, what is the nine-month forward price range?
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk
11th Edition
0324422865, 978-0324422863
