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1. The spot price of an investment asset is $90 and the risk-free rate for all maturities is 5% with continuous compounding. The asset provides

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1. The spot price of an investment asset is $90 and the risk-free rate for all maturities is 5% with continuous compounding. The asset provides the first income of $2 at the end of the first year and the second income of $1 at the end of the second year. a. What is the total present value of the two incomes? Show your calculation. b. What is the two-year forward price? Show your calculation. (Use this formula: F0=(S0I)et,I= PV of known income (such as, Dividend, coupon))

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