Assume that the risk-free rate has not changed

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On Oct 10, 2015, gold on the spot market is at $1,000 an ounce. A forward gold contract for delivery of gold on Oct 10, 2016 is priced at $1,030. Three months pass and spot gold is still at $1,000. What should be the approximate price of the Oct 10, 2016 forward contract now? Assume that the risk-free rate has not changed in the three months and that there are no storage and other costs.

a) 1,030

b) 1,022

c) 1,015

d) 1,000

Reference no: EM13870614

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