Question

One Chicago has just introduced a new single stock futures contract on the stock of Brandex, a company that currently pays no dividends. Each contract calls for delivery of 2,000 shares of stock in one year. The T-bill rate is 4% per year. a. If Brandex stock now sells at $250 per share, what should the futures price be

Answer 1

Answer:

The futures price would be $260

Explanation:

In order to calculate the amount the futures price be, If Brandex stock now sells at $250 per share, we would have to make the following calculation:

Future price=Stock Price*T-bil rate

According to the given data we have the following:

T-bil rate = 4%

Stock Price = $250

Therefore, Future price = $250 * (1.04)

Future price =$260

The futures price would be $260