Question
You want to determine the appropriate forward price on your maple trees for a year from now. The current market price for a maple tree
You want to determine the appropriate forward price on your maple trees for a year from now. The current market price for a maple tree is $1230 and the one year risk free rate is 5 percent. However, suppose you are able to sell the maple syrup produced in 6 months for $300 and you have maintenance costs at a rate of 3 percent. Also assume that the 6-month risk free rate is 2 percent.
calculate What is the appropriate forward price for this question above?
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Solution To calculate the appropriate forward price we need to consider the cost of carry whic...
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
