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CFA Level 2
Derivatives

Forward Pricing of XYZ Shares

Medium Forward Pricing And Valuation Equity Forwards

ABC Corporation plans to enter into a forward contract to purchase shares of XYZ Inc. in six months. The current price of XYZ Inc.'s shares is $75. The risk-free rate is 4% annually, and the dividend yield on XYZ Inc.'s shares is 2% annually. What is the fair price of the forward contract for XYZ shares at the end of six months?

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% Correct73%