Homework Answers
Buy stock today sell forward today
cash flow now:-S0+P
Cash flow at expiry:F
So, for value to be zero now,
-S0+p+Fe^(-rt)=0
=>F=(S0-p)e^(rt)
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Find the no-arbitrage forward price
Question 1 (Forward Contracts) Consider a good that has a spot price of Pe = 100 Euros today. The riskless interest rate is r = 10%. a) Find the no-arbitrage forward price for a forward contract on this under- lying good that matures in sixth months time from now! b) Assume that you enter into a forward contract as a buyer and promise to buy a quantity of 100,000 units of the good (at the...
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ach of the following situations, state at which date, if any, revenue will be recognised. A contract for the sale of goods is entered into on 1 May 2019. The goods are delivered on 15 May 2019. The buyer pays for the goods on 30 May 2019. The contract contains a clause that entitles the buyer to rescind the purchase at any time. This is in addition to normal warranty conditions. A contract for the sale of goods is entered...
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