Six-month forward contract on non-dividend-paying stock

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Reference no: EM131974438

1. The current forward price on gold is $1,620 per troy ounce. You entered into a forward contract to deliver 200 troy ounces of gold at the current forward price, the value of your contract is

(a) 324,000 dollars. (b) 1,620 dollars.

2. Suppose that you enter into a six-month forward contract on a non-dividend- paying stock when the stock price is $30 and the risk-free interest rate (with continuous com- pounding) is 12% per annum. The forward price should be closest to?

(a) 28 dollars.

(b) zero dollar.

(d) 30 dollars.

Reference no: EM131974438

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