Please help: Consider a forward contract on a dividend paying stock which was entered some time ago.

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Consider a forward contract on a dividend paying stock which was entered some time ago. It currently has 6 months till maturity. The stock is expected to pay $1.5 dividends in 1 and in 4 months. The risk-free interest rate is 5% p.a. continuously compounded, the current stock price is $70 and the delivery price is $72. What is a 6-month forward price and the value of the forward contract?

Posted Date: May 18, 2024 07:01 AM

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Please help: Consider a forward contract on a dividend paying stock which was entered some time ago.

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