Investment Theory_Week 7_Contextual

Forward Price

Time to Maturity

as.Date("2023-12-01")-as.Date("2023-10-09")

## Time difference of 53 days

We now declare all the components used in the calculation of the theoretical price of this stock

st = 39.77
risk_free = 0.0418
tau = 53

Utilizing Equation 7.2, we have a function of

ft = function(st, risk_free, tau){
  ft = st * (1 + risk_free)^(tau/365)
  return(ft)
}
ft(st, risk_free, tau)

## [1] 40.00718