jear long forward contract on a non-dividend-paying stock is entered into when the stock pric erest is 10% per annum. One year later, the price of the stock is $54 and the risk-free interest ra of the forward contract at the end of one year is: е: Equal to zero Less than 0 Greater than 0

jear long forward contract on a non-dividend-paying stock is entered into when the stock pric erest is 10% per annum. One year later, the price of the stock is $54 and the risk-free interest ra of the forward contract at the end of one year is: е: Equal to zero Less than 0 Greater than 0

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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20. A two-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $50 and the risk-free
rate of interest is 10% per annum. One year later, the price of the stock is $54 and the risk-free interest rate is still 10% per annum.
The value of the forward contract at the end of one year is:
Select one:
a. Equal to zero
b. Less than 0
c. Greater than 0

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