Questions And Problems

A bank quotes you a rate of interest of 14 per annum with quarterly compounding. What is the equivalent rate with a continuous compounding and b annual compounding 3.2. Explain what happens when an investor shorts a certain share. 3.3. Suppose that you enter into a 6-month forward contract on a non-dividend-paying stock when the stock price is 30 and the risk-free interest rate with continuous compounding is 12 per annum. What is the forward price 3.4. A stock index currently stands at...