CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

What must the 3-month futures price be on a stock that has a dividend yield of 2% when the current price of the stock is $50 and the risk-free rate is 5%?
A. $51.5
B. $50
C. $50.37
Explanation: The 3-month futures price should be $50 (1 + 0.05 - 0.02)0.25 = 50.37.

User Contributed Comments 2

User Comment
Alexalee please help: why not (50+1/(1.05)*0.25))(1.05)*0.25 =(50+0.99)*1.0123=51.62???? (So+PVof div)*(1+r)*t?? thx
maxsouto Alexalee: I think that would mean you are compounding 4 times a year
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