A hypothetical futures contract on a nondividend-paying stock with a current spot price of $100 has a maturity of 4 years. If the T-bill rate is 7%, what should the futures price be?
A) $76.29
B) $93.46
C) $107
D) $131.08

Name: A hypothetical futures contract on a nondividend-paying stock with a current spot price of $100 has a maturity of 4 years. If the T-bill rate is 7%, what should the futures price be? A) $76.29 B) $93.46 C) $107 D) $131.08
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Question

Quizplus · Accepted Answer

F₀ = S₀(1 + r)⁴ = $100(1.07)⁴= $131.08

A Hypothetical Futures Contract on a Nondividend-Paying Stock with a Current