Question

A hypothetical futures contract on a nondividend-paying stock with a current spot price of $60 has a maturity of 1 year. If the T-bill rate is 5%, what should the futures price be

Answer 1

Answer:

$63

Explanation:

Calculation for what should the futures price be

Using this formula

Future price=Current spot price (1 + r)

Let plug in the formula

Future price= $60*(1+0.05)

Future price= $60* (1.05)

Future price= $63

Therefore what should the futures price be is $63