Derivatives Q78

78Consider a forward contract where the underlying is the Indus Motor stock. The stock does not pay dividends and does not incur carrying costs during the term of the contract. The forward price is found by:

Option : C
Explanation : For a stock that neither receives benefits nor incurs carrying costs during the term of the contract, the forward price is found by compounding the spot price at the risk-free rate over the life of the contract.

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