- CFA Exams
- CFA Level I Exam
- Study Session 16. Derivatives
- Reading 49. Basics of Derivative Pricing and Valuation
- Subject 2. The Concept of Pricing vs. Valuation
CFA Practice Question
Today you entered a short six-month forward contract to sell a stock at a price of $32 six months from now. The stock is priced at $30 today. The risk-free interest rate is 3%, compounded annually. The price of your forward contract today is ______.
A. zero
B. $30
C. $32
Explanation: The price is the fixed forward price embedded into the contract.
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