The Spot Price of an Asset Is $50

question 14

Multiple Choice

The spot price of an asset is $50. The expected return on the asset is 10% a year (in simple terms) and the standard deviation of these returns is 20%. The risk-free rate of interest is 5% a year in simple terms. What is the one-year forward price of the asset?

• A) $52.50
• B) $55.00
• C) $60.00
• D) Cannot be calculated from the given information.

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