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24 December, 04:07

The current price of a stock is $400 per share and it pays no dividends. Assuming a constant interest rate of 8% per year compounded quarterly, what is the stock's theoretical forward price for delivery in 9 months?

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  1. 24 December, 04:32
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    The formula is

    A=p (1+r/k) ^kt

    A future value?

    P current price 400

    R interest rate 0.08

    K compounded quarterly 4

    T time 9/12

    A=400 * (1+0.08:4) ^ (4 * (9:12))

    A=424.48
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