Question
In: Finance
Given the information below, Spot = R100 Risk free rate = 10% Maturity = 1 year...
Given the information below, Spot = R100 Risk free rate = 10% Maturity = 1 year After 3 months the new spot price is R140. What will be the profit/loss to the long position in 3 month?
Solutions
Expert Solution
ANSWER DOWN BELOW. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.
Spot price(S) = 100
Risk free rate (r)= 10%
Forward rate after 3 months = S*(1+r)^(3/12)
= 100*(1.10)^(0.25)
= 102.41
New spot price = 140
Profit = 140-102.41 = $37.59 (Answer).
jeff jeffy answered 2 years agoRelated Solutions
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