alleryStart learning →For an asset paying no income, the no-arbitrage forward price equals the spot price compounded at the:
AEquity risk premium
BDividend yield
CRisk-free rate
DInflation rate
Answer & Solution
Correct answer: C. Risk-free rate
Owning the asset at T through a forward or by buying now must cost the same, so spot is grown at the risk-free rate.
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