What are the forward price and the initial value of the forward contract?
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Last Updated:
12-Jul-23
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A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $40 $38 and the risk-free rate of interest is; 8% per annum with continuous compounding.
- A) What are the forward price and the initial value of the forward contract?
- B) Six months later, the price of the stock is $45 46 and the risk-free interest rate is still 10%8%.What are the forward price and the value of the forward contract?
