Multiple Choice
If the risk-free rate is r and price of a nondividend paying stock grows at rate m with volatility s,at what rate does a forward price of the stock grow for a forward contract maturing at a future time T.
A) m
B) m−s2/2
C) m−r
D) r−s2/2
Correct Answer:
Verified
Correct Answer:
Verified
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