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4. Three months ago, an investor entered into a 6-month forward contract to buy 10,000 shares of Cerevel Therapeutics (Ticker: CERE). The delivery price agreed
4. Three months ago, an investor entered into a 6-month forward contract to buy 10,000 shares of Cerevel Therapeutics (Ticker: CERE). The delivery price agreed to was $20/share. Today the stock closed at $22.59 share. Suppose the 3-month interest rate is 5% per year continuously compounded. a) Assuming the stock is not expected to pay any dividends over the next 3 months, what is the current forward price of the stock? b) What is the value of a long contract with forward price equal to the price you estimated in (a), and expiring in T-3 months? c) What is the value of the long contract held by the investor?
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