It seems like you're asking about the pricing of forward and futures contracts on an underlying asset that pays no dividend, a known dividend, or a known dividend yield. Here's a step-by-step explanation:

1. **No Dividend**: The price of a forward or futures contract on an asset that pays no dividend is typically calculated using the spot price of the asset and the risk-free rate of return. The formula is: F = S * e^(rT), where F is the forward price, S is the spot price, r is the risk-free rate, and T is the time to maturity.

2. **Known Dividend**: If the asset pays a known dividend, the dividend is subtracted from the spot price before calculating the forward price. The formula is: F = (S - D) * e^(rT), where D is the present value of dividends.

3. **Known Dividend Yield**: If the asset has a known dividend yield, the yield is subtracted from the risk-free rate in the exponent of the formula. The formula is: F = S * e^((r-q)T), where q is the dividend yield.

Remember, these formulas assume that markets are efficient, there are no transaction costs or taxes, and that borrowing and lending are possible at the risk-free rate.

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It seems like you're asking about the pricing of forward and futures contracts on an underlying asset that pays no dividend, a known dividend, or a known dividend yield. Here's a step-by-step explanation:

1. **No Dividend**: The price of a forward or futures contract on an asset that pays no dividend is typically calculated using the spot price of the asset and the risk-free rate of return. The formula is: F = S * e^(rT), where F is the forward price, S is the spot price, r is the risk-free rate, and T is the time to maturity.

2. **Known Dividend**: If the asset pays a known dividend, the dividend is subtracted from the spot price before calculating the forward price. The formula is: F = (S - D) * e^(rT), where D is the present value of dividends.

3. **Known Dividend Yield**: If the asset has a known dividend yield, the yield is subtracted from the risk-free rate in the exponent of the formula. The formula is: F = S * e^((r-q)T), where q is the dividend yield.

Remember, these formulas assume that markets are efficient, there are no transaction costs or taxes, and that borrowing and lending are possible at the risk-free rate.

Knowee AI · Accepted Answer

It seems like you're asking about the pricing of forward and futures contracts on an underlying asset that pays no dividend, a known dividend, or a known dividend yield. Here's a step-by-step explanation:

1. **No Dividend**: The price of a forward or futures contract on an asset that pays no dividend is typically calculated using the spot price of the asset and the risk-free rate of return. The formula is: F = S * e^(rT), where F is the forward price, S is the spot price, r is the risk-free rate, and T is the time to maturity.

2. **Known Dividend**: If the asset pays a known dividend, the dividend is subtracted from the spot price before calculating the forward price. The formula is: F = (S - D) * e^(rT), where D is the present value of dividends.

3. **Known Dividend Yield**: If the asset has a known dividend yield, the yield is subtracted from the risk-free rate in the exponent of the formula. The formula is: F = S * e^((r-q)T), where q is the dividend yield.

Remember, these formulas assume that markets are efficient, there are no transaction costs or taxes, and that borrowing and lending are possible at the risk-free rate.

Forward and futures contract prices on underlying asset that paysno dividend/known dividend/known dividend yield

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