Question

A single stock futures contract on a nondividend-paying stock with current price $175 has a maturity of one year. a. If the T-bill rate is 5.8%, what should the futures price be? (Round your answer to 2 decimal places.) Futures price b. What should the futures price be if the T-bill rate is still 5.8% and the maturity of the contract is three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Futures price c. What if the interest rate is 6.4% and the maturity of the contract is three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Futures price

Answer 1

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1820 I dx ENG х 12 11 01 2020 ... HIZBA fr HI2B8 НР HG нН HI HJ НК HL нм HN но 264 265 266 267 268 S0 = 175 a 5.80% 269 t= 270 so*(1+r)^t 175*(1+0.0580)^1 271 FUTURES PRICE AFTER A YEAR = 272 273 185.15 274 5.80% r= 275 t= 276 FUTURES PRICE AFTER 3 YEARS = 277 so*(1+r)^t | 175*(1+0.0580)^3 278 279 207.25 6.40% 280 281 3 t= 282 283 284 so*(1+r)^t 205*(1+0.07)^3 FUTURES PRICE AFTER 3 YEARS = 210.80 285 286 287 288 289 290 291 292 ARM, MSI, conlidentelNDEX CURRENCY LOAN FCF HEDGING MONEY MARKET | GM HPR AM • . PREF AND DIV POLICY OCF CASH FLOW STATW CROSS OVER TAX GROWTH SUST CY.