Answered

Welcome to Westonci.ca, the ultimate question and answer platform. Get expert answers to your questions quickly and accurately. Discover comprehensive answers to your questions from knowledgeable professionals on our user-friendly platform. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

The spot price of an investment asset that provides no income is $30 and the risk-free rate for all maturities (with continuous compounding) is 10%. What is the three-year forward price

Sagot :

abiolataiwo2015

The three-year forward price is $40.50.

What forward price?

Forward price can be defined as the agreed price which a seller gives to the buyer in a forward contract at a specific period of time.

Using this formula

Forward price=S0ert

Where:

r=Risk-free rate=10%

S0=Spot price=$30

T=Time=3 years

Let plug in the formula

Forward price=30×e^(10%×3)

Forward price=30×e^0.3

Forward price =$40.495

Forward price=$40.50 (Approximately)

Inconclusion the three-year forward price is $40.50.

Learn more about forward price here:https://brainly.com/question/24703884

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.