Stock a Has a Spot Price of $50

question 3

Multiple Choice

Stock A has a spot price of $50.It is expected to appreciate by 2% over the next quarter.The risk-free rate for the next quarter is 2% in continuously-compounded and annualized terms,and the quarterly continuous dividend payment is also 2% in continuously-compounded and annualized terms.The three-month forward price is

• A)$50.00
• B)$50.25
• C)$50.50
• D)$50.75