Determine what can be concluded about x, Corporate Finance

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Determine what can be concluded about x

Problem

The current price of a BP PLC stock is 145. The expected value of the stock price in three years is 172 per share. The stock pays no dividends.

You are also given that the risk-free interest rate is positive, there are no transaction costs and Investors require compensation for risk.

The price of a three-year forward on a share of this stock is X, and at this price an investor is willing to enter into the forward.

Determine what can be concluded about X. Choose your answer from below with detailed explanation.

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Corporate Finance: Determine what can be concluded about x

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Corporate Finance: Determine what can be concluded about x

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