Suppose the stock price is $83 and the continuously compounded annual interest rate is 7%. If the 6- month forward price is $85, what is the annualized forward premium?
Suppose the stock price is $83 and the continuously compounded annual interest rate is 7%. If the 6- month forward price is $85, what is the annualized forward premium?
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
![Suppose the stock price is $83 and the continuously compounded annual interest
rate is 7%. If the 6- month forward price is $85, what is the annualized forward
premium?
3.74%
4.35%
O 4.76%
5.41%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0782c669-efca-4e11-aaaf-c84fe4abc59e%2F6cae5bab-fd67-4a9a-a530-5997b9c57d79%2Fjjge67_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose the stock price is $83 and the continuously compounded annual interest
rate is 7%. If the 6- month forward price is $85, what is the annualized forward
premium?
3.74%
4.35%
O 4.76%
5.41%
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