Finance Homework Help: Forward contracts?
A share of Berkshire Hathaway stock (BRK.B) is currently selling for $230. A pensionfund manager is planning to purchase 1,000 shares in three months. He is concernedthat the price will rise by then. To hedge this risk, he enters into a forward contractto buy 1,000 shares of BRK.B in three months. Assume that the risk-free rate is 2%(APR, continuous compounding).
•Calculate the appropriate price per share at which the pension fund manager can contract to buy BRK.B in three months.
•Assume that two months into the contract the BRK.B stock price is $225. Calculate the pension fund manager’s gain or loss from the forward contract.
•Suppose that at expiration, the price of the stock is $245. Calculate the pension fund manager’s gain or loss from the forward contract.
- Anonymous1 month ago
I know exactly how to do this homework.
On the day it's due, call in and use a voice changed (which you can get from a toy shop), and say 'Sorry Sir/Miss, I am really ill today and cannot come in.'
Then when you return, and the teacher asks you for the homework. When they ask for it, pretend to faint on the floor and lick the floor so you have a bad taste and then be sick, so you get sent home again.
Then when you return and the teacher asks for the homework, say you forgot it.
Then quit the school and become a monk and live in monasteries
Let us know how it goes,