Today is January 1.The forward price for a gold forward maturing on April 1 is $1,560 per ounce.The continuously compounded interest rate is 6 percent per year.Then the forward price for a forward contract on gold maturing on July 1 is:

Question

Quizplus · Accepted Answer

To calculate the forward price for a gold forward maturing in July, we need to first calculate the time between April 1 and July 1, which is 3 months. Using the continuously compounded interest rate, we can calculate the discount factor for 3 months as follows:

e^(-0.06*(3/12)) = e^(-0.015) = 0.98516

The forward price for a forward contract maturing in July can then be calculated as:

Forward price = Spot price * Discount factor = $1,560 * 0.98516 = $1,537.58 per ounce.

Therefore, the correct answer is D) $1,583.58.

Today Is January 1