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The current price of a stock is $400 per share and it pays no dividends. Assuming a constant interest rate of 8% per year compounded quarterly, what is the stock's theoreti…

The current price of a stock is $400 per share and it pays no dividends. Assuming a constant interest rate of 8% per year compounded quarterly, what is the stock's theoreti…
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The current price of a stock is $400 per share and it pays no dividends. Assuming a constant interest rate of 8% per year compounded quarterly, what is the stock's theoretical forward price for delivery in 9 months?

User Kyiu
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1 Answer

6 votes
The formula is
A=p (1+r/k)^kt
A future value?
P current price 400
R interest rate 0.08
K compounded quarterly 4
T time 9/12

A=400×(1+0.08÷4)^(4×(9÷12))
A=424.48
User Kamikaze
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8.3k points
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