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Two Assets AA And BB Have the Same Spot Price Today AA Is Expected to Grow at 10% Over the Year and Today

Question 4

Multiple Choice

Two assets AA and BB have the same spot price today. Asset AA is expected to grow at 10% over the year and asset BB is expected to grow at 12%. Which of the following is true if there are no holding costs or benefits for either asset?


A) Asset AA 's one-year forward price will be less than that of asset BB .
B) Asset AA 's one-year forward price will be greater than that of asset AA .
C) Asset AA 's one-year forward price will be equal to that of asset BB .
D) None of the above can be ascertained with certainty, as it also depends on other factors.

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