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a) A stock ABC has a current price of $100, and the risk-free rate of interest is 7% with continuous compounding. (i) Calculate the fair

a) A stock "ABC" has a current price of $100, and the risk-free rate of interest is 7% with continuous compounding.

(i) Calculate the fair forward price for a forward contract on one stock "ABC" deliverable 8 months from now. Suppose that the stock "ABC" does not pay dividends.

(ii) Suppose now that the stock "ABC" pays a dividend of $3.5 per share 6 months from now. Calculate the fair forward price after accounting for the dividend payment.

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