Question
A $60 stock pays a continuous dividend of 5%. The continuously compounded risk-free rate is 6%. What is the price of a prepaid forward contract
A $60 stock pays a continuous dividend of 5%. The continuously compounded risk-free rate is 6%. What is the price of a prepaid forward contract that expires 12 months from today?
Answers:
a. $60.60
b. $59.40
c. $57.07
d. $55.99
e. $63.08
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Business Finance
Authors: Ronald R. Pitfield
1st Edition
0852581513, 978-0852581513
