Suppose There Is a Risk Premium of $0

question 53

Multiple Choice

Suppose there is a risk premium of $0.50.The spot price is $20 and the futures price is $22.What is the expected spot price at expiration?

• A)$21.50
• B)$22.50
• C)$20.50
• D)$24.50
• E)none of the above

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Definitions:

British Pounds

The British pound is the official currency of the United Kingdom, symbolized as GBP, and is one of the world's major currencies traded in foreign exchange markets.

Canadian Dollars

The currency of Canada, represented by the symbol CAD, and used throughout the country for all financial transactions.