A One Year Gold Futures Contract Is Selling for $641

question 16

Multiple Choice

A one year gold futures contract is selling for $641. Spot gold prices are $600 and the one year risk free rate is 6%.
-A hypothetical futures contract on a non-dividend-paying stock with current spot price of $100 has a maturity of one year.If the T-bill rate is 5% what should the futures price be?

• A) $95.24
• B) $100
• C) $105
• D) $107

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Definitions:

Defect Of Title

A legal issue with the title to a property that may prevent a seller from providing clear ownership, affecting the ability to sell or transfer the property.

Personal Defences

Legal arguments used by individuals in court to justify their actions or to deny liability.

Holder In Due Course

A person who acquires a negotiable instrument before its due date that is complete and regular on its face, and who gave value for the instrument, without any knowledge of default or defect in the title of prior holders.

Negotiable Instrument

A written document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the name of the payer and payee.