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1. A 1 year long forward contract an a non-dividend paying stock is entered into when...
A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price...
A one-year long forward contract on a non-dividend-paying stock is entered into when the stock price is $56 and the risk-free rate (with continuous compounding) is 8%.` (1) What are the forward price and the initial value of the forward contract? (2) Five months later, the price of the stock is $60 and the risk-free rate is still 8%. What are the forward price and the value of the forward contract?
On 8/15/2019, a 3-year forward contract, expiring 8/15/2022, on a non-dividend-paying stock was entered into when...
On 8/15/2019, a 3-year forward contract, expiring 8/15/2022, on a non-dividend-paying stock was entered into when the stock price was $50 and the risk-free interest rate was 10.5% per annum with continuous compounding. 1 year later, on 8/15/2020, the stock price becomes $57. What is the "delivery" price of the forward contract entered into on 8/15/2019?
- On 8/15/2019, a 3-year forward contract, expiring 8/15/2022, on a non-dividend-paying stock was entered into...
- On 8/15/2019, a 3-year forward contract, expiring 8/15/2022, on a non-dividend-paying stock was entered into when the stock price was $55 and the risk-free interest rate was 10.8% per annum with continuous compounding. 1 year later, on 8/15/2020, the stock price becomes $58. What is the "delivery" price of the forward contract entered into on 8/15/2019? Round your answer to the nearest 2 decimal points. For example, if your answer is $12.345, then enter "12.35" in the answer box....
A one-year long forward contract on a gas portfolio is entered into when the gas portfolio...
A one-year long forward contract on a gas portfolio is entered into when the gas portfolio price is $3 and the risk-free rate of interest is 3% per annum with continuous compounding. What are the forward price and the initial value of the forward contract? Six months later, the price of the gas portfolio is $2.6 and the risk-free interest rate is still 3%. What are the forward price and the value of the forward contract?
Suppose that you enter into a six-month forward contract on a non-dividend-paying stock when the stock...
Suppose that you enter into a six-month forward contract on a non-dividend-paying stock when the stock price is $30 and the risk-free interest rate (with quarterly compounding) is 12% per annum. a) What is equivalent continuously compounding rate? b) What is the forward price?
Exercise 3. A short forward contract on a dividend-paying stock was entered some time ago. It currently has 9 months to maturity. The stock price and the delivery price is s25 and $24 respectively. T...
Exercise 3. A short forward contract on a dividend-paying stock was entered some time ago. It currently has 9 months to maturity. The stock price and the delivery price is s25 and $24 respectively. The risk-free interest rate with continuous compounding is 8% per annum. The underlying stock is expected to pay a dividend of $2 per share in 2 months and an another dividend of $2 in 6 months. (a) What is the (initial) value of this forward contract?...
Consider a six-month forward contract on a non-dividend paying stock. Assume the current stock price is...
Consider a six-month forward contract on a non-dividend paying stock. Assume the current stock price is $50 and the risk-free interest rate is 7.84% per annum with continuous compounding. Suppose the price of this six-month forward price is $53.50. Show that it creates an arbitrage opportunity? Write down the complete strategy for an arbitrageur --- you must list down all the actions that are required now and later and demonstrate how arbitrageur earns a risk-less profit.
Consider a long forward contract to purchase a non-dividend-paying stock in 3 months. Assume the current...
Consider a long forward contract to purchase a non-dividend-paying stock in 3 months. Assume the current stock price is $40 and the risk-free interest rate is an APR of 5% compounded quarterly. If the market forward price is $43, show explicitly the arbitrage opportunity. note: this is not continuous compounding but discrete! so please do not use the Se^(rT) ( exponential formula)
Consider a forward contract to purchase a non-dividend-paying stock in 6 months. Assume the current stock...
Consider a forward contract to purchase a non-dividend-paying stock in 6 months. Assume the current stock price is $34 and the continuously compounded risk-free interest rate is 6.5% per annum. a. Explain the arbitrage opportunities if the forward price is $37 in the market. b. Explain the arbitrage opportunities if the forward price is $33 in the market.
A long forward on a non-dividend-paying stock has six months to maturity. The risk free rate...
A long forward on a non-dividend-paying stock has six months to maturity. The risk free rate is 10% annually, the current stock price is $25, and the delivery price is $24. What is the value of forward contract today?
Exercise 3. A short forward contract on a dividend-paying stock was entered some time ago. It currently has 9 months to maturity. The stock price and the delivery price is s25 and $24 respectively. The risk-free interest rate with continuous compounding is 8% per annum. The underlying stock is expected to pay a dividend of $2 per share in 2 months and an another dividend of $2 in 6 months. (a) What is the (initial) value of this forward contract?...
A long forward on a non-dividend-paying stock has six months to maturity. The risk free rate is 10% annually, the current stock price is $25, and the delivery price is $24. What is the value of forward contract today?
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