Question: Suppose we hold a forward contract on a stock with expiration 6 months from now. We entered into this contract 5 months ago, so when
Suppose we hold a forward contract on a stock with expiration 6 months from now. We entered into this contract 5 months ago, so when we entered into the contract the expiration was T= 1 year. The stock price 6 months ago was $100 , the current stock price is $125, and the current interest rate is 10% compounded semi-annually (This is the same rate that prevailed 6 months ago). What is the current value of our forward contract
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
