The Spot Price of an Investment Asset Is $30 and the Risk-Free

question 3

Multiple Choice

The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding.The asset provides an income of $2 at the end of the first year and at the end of the second year.What is the three-year forward price?

• A) $19.67
• B) $35.84
• C) $45.15
• D) $40.50

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