Calculate the Forward Contract Value of an asset with the following data points: • Current Spot Price: $27.50 • Risk Free Rate: 3.0% • Contract Length: 6 months • Known Income (I): $2 • Average Yield (q): 0.0% • Delivery Price (K): $25

Calculate the Forward Contract Value of an asset with the following data points: • Current Spot Price: $27.50 • Risk Free Rate: 3.0% • Contract Length: 6 months • Known Income (I): $2 • Average Yield (q): 0.0% • Delivery Price (K): $25

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

Section: Chapter Questions

Problem 1PS

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Question

12.

Calculate the Forward Contract Value of an asset with
the following data points:
• Current Spot Price: $27.50
• Risk Free Rate: 3.0%
• Contract Length: 6 months
• Known Income (I): $2
• Average Yield (q): 0.0%
• Delivery Price (K): $25
Round to 2 decimal places.

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