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3: A one year long forward contract on a nondividend paying stock is signed when the stock price is $50 and the risk free rate,

3: A one year long forward contract on a nondividend paying stock is signed when the stock price

is $50 and the risk free rate, r = 0:10 per year. There is continuous compounding. (a) Find the forward price and the initial value of the forward contract. (b) Six months later, the price of the stock is $60 and r = 0:10: Find the forward price and the

initial value of the forward contract.

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