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A hypothetical futures contract on a nondividend-paying stock with a current spot price of $60 has a maturity of 1 year. If the T-bill rate is 5%, what should the futures price be
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A hypothetical futures contract on a nondividend-paying stock with a current spot price of $60 has a maturity of 1 year. If the T-bill rate is 5%, what should the futures price be

User Gillie
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1 Answer

6 votes

Answer:

$63

Step-by-step explanation:

Calculation for what should the futures price be

Using this formula

Future price=Current spot price (1 + r)

Let plug in the formula

Future price= $60*(1+0.05)

Future price= $60* (1.05)

Future price= $63

Therefore what should the futures price be is $63

User Elodie
by
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