CFA Practice Question

There are 227 practice questions for this study session.

CFA Practice Question

Three months ago, an investor entered into a six-month forward contract to sell a stock. The delivery price agreed to was $55. Today, the stock is trading at $45. Suppose the three-month interest rate is 4.80% in continuously compounded terms. Assuming the stock is not expected to pay any dividends over the next three months, what is the current forward price of the stock?
A. 45.5433
B. 50.9395
C. 56.3360
Explanation: The current forward price is 45 * e(0.048 * 3/12) = 45.5433.

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