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uranmaximum [27]
3 years ago
11

A single-stock futures contract on a non-dividend-paying stock with current price $250 has a maturity of 1 year. If the T-bill r

ate is 4%. What should the futures price be if the maturity of the contract is 2 years?
Business
1 answer:
Nuetrik [128]3 years ago
4 0

Answer:

$270.4

Explanation:

Calculation for What should the futures price be if the maturity of the contract is 2 years

Using this formula

Future Price= Stock Price ×(1 + Risk Free rate)^Maturity years

Let plug in the formula

Future Price=$250×(1+4%)^2

Future Price=$250×(1+0.04)^2

Future Price$250×(1.04)^2

Future Price=$250×1.0816

Future Price=$270.4

Therefore What should the futures price be if the maturity of the contract is 2 years will be $270.4

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