A non-dividend-paying stock is traded at $50 per share. Suppose the risk free rate is 5% with continuous compounding. The futures contract multiplier is 100.

What is is the 6-month futures price?

Suppose you have 1000 shares of the stock and decide to hedge your position by taking a short position in 5 futures contracts. What would be your portfolio value if the stock price goes down to $40?

Answer rating: 100% (QA)

The futures price can be calculated using the costofcarry model F S erqT Wh... View the full answer