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You want to invest in a futures contract on an asset. The current market value is 120. The asset has cost of carry of 7

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You want to invest in a futures contract on an asset. The current market value is 120. The asset has cost of carry of 7 per year. This cost needs to be paid on 1 January each year. On 1 July each year, the asset receives a dividend of 5. The current interest rate is r=1.75% p.a. a) You enter this contract. Calculate the forward price of a futures contract with one year maturity if you buy it on 1 January. The cost of carry needs to be paid right away by the seller at t=0. b) After six month, the price of the asset has decreased to 90, what is the value of your contract? c) After another three month, the price of the asset has rebounded to 130, what is the value of your contract now? You decide not to buy the one year contract in t=0 because this is too short for you. Instead, you want to invest in a three years contract. d) You enter this 3y contract. Calculate the forward price if you buy it on 1 January. The cost of carry needs to be paid right away for the first year by the seller at t=0. You want to invest in a futures contract on an asset. The current market value is 120. The asset has cost of carry of 7 per year. This cost needs to be paid on 1 January each year. On 1 July each year, the asset receives a dividend of 5. The current interest rate is r=1.75% p.a. a) You enter this contract. Calculate the forward price of a futures contract with one year maturity if you buy it on 1 January. The cost of carry needs to be paid right away by the seller at t=0. b) After six month, the price of the asset has decreased to 90, what is the value of your contract? c) After another three month, the price of the asset has rebounded to 130, what is the value of your contract now? You decide not to buy the one year contract in t=0 because this is too short for you. Instead, you want to invest in a three years contract. d) You enter this 3y contract. Calculate the forward price if you buy it on 1 January. The cost of carry needs to be paid right away for the first year by the seller at t=0

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