Answered: If the contract at inception is $20 for…

If the contract at inception is $20 for a future expiring in 1 year and the current contract is 22 what is the inplied future value with rf rate of 5%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 1P

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Question

If the contract at inception is $20 for a future expiring in 1 year and the current contract is 22 what is the inplied future value with rf rate of 5%?

answers:

A) 1.95

B) 2

C) 1.87

D) none of above

you have an option that pays 1 if the stock price = or above 10 and 0. If the cureent stock price is 7 and movements are to 14 and 3.5 what is the value of this option assuming expiry in 1 year and interest rate of 5%

answers:

A) .349

B) .356

C) .362

D) none of the above

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