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Suppose today you enter a forward contract to buy 1 share of ADM stock in 1 year at a forward price of $30, and today you also buy 1-year Treasury bills with a face value of $30. ADM is not expected to pay a dividend in the next 1 year. Your position has the same payoff in 1 year as:

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Cricetus

"Buying today 1 share of ADM itself" is the appropriate response. A further solution is provided below.

According to the question,

Buy 1 share of ADM stock in time,

= 1 year

Forward price,

= $30

Face value,

= $30

We can say that,

→ Buying share today will be:

[tex]= Investing \ in \ 1 \ year \ T-bill+Buying \ forward \ contracts[/tex]

Thus the above is the right solution.

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