A hypothetical futures contract on a non-dividend-paying stock with current spot price of $100 has a maturity of four years. If the T-bond rate is 7% what should the futures price be?
A)$76.29
B)$93.46
C)$107.00
D)$131.08

Question

Quizplus · Accepted Answer

The futures price is calculated using the formula: Futures Price = Spot Price * e^(r*t), where r is the risk-free rate and t is the time to maturity. Here, Futures Price = $100 * e^(0.07*4) = $100 * e^0.28 ≈ $131.08.

A Hypothetical Futures Contract on a Non-Dividend-Paying Stock with Current