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A one-year forward contract is written on a dividend-paying stock. The current stock is $63.375 and it is known that the stock will pay a
A one-year forward contract is written on a dividend-paying stock. The current stock is $63.375 and it is known that the stock will pay a dividend of $1.50 per share in one month and a dividendof $2 per share in seven months' time. The price of a one-month Treasury bill is 0.9967, a seven- month Treasury bill 0.9741, and a twelve-month Treasury bill 0.9512, assuming a face value of $1. What is the forward price?
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