What must be price of the six-month maturity future contract, Finance Basics

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What must be price of the six-month maturity future contract

Problem

Suppose that the current stock price of WV firm is trading at £10. Moreover, assume that firm WV pays no dividends and that the annual risk-free interest rate is 5% p.a. with continuous compounding. What must be the price of the 6-month maturity futures contract written on AAA stock in order to avoid arbitrage in the market?

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Finance Basics: What must be price of the six-month maturity future contract

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Finance Basics: What must be price of the six-month maturity future contract

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