A 1-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $ 22.1 and the risk-free rate of interest is 1.9 % per annum with continuous compounding. 2 months later, the price of the stock is $ 27 and the risk-free interest rate is now 1.8%. What is the forward price at this point in time? (Report your answer in dollars and cents.) D Answer

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A 1-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $ 22.1 and the risk-free rate of
interest is 1.9% per annum with continuous compounding.
2 months later, the price of the stock is $ 27 and the risk-free interest rate is now 1.8%. What is the forward price at this point in time?
(Report your answer in dollars and cents.)
Answer:
13
Transcribed Image Text:A 1-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $ 22.1 and the risk-free rate of interest is 1.9% per annum with continuous compounding. 2 months later, the price of the stock is $ 27 and the risk-free interest rate is now 1.8%. What is the forward price at this point in time? (Report your answer in dollars and cents.) Answer: 13
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