Question
A short forward contract on a dividend-paying stock was entered some time ago. It currently has 8 months to maturity. The stock price and the
A short forward contract on a dividend-paying stock was entered some time ago.
It currently has 8 months to maturity.
The stock price and the delivery price is $22 and $24 respectively.
The risk-free interest rate with continuous compounding is 6% per annum.
The underlying stock is expected to pay a dividend of $1 per share in 2 months and an another dividend of $1 in 5 months.
What is the current forward price? What is the value of this short forward contract? What is the delivery price for this contract?
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Wiley CPAexcel Exam Review 2018 Study Guide Auditing And Attestation
Authors: Wiley
1st Edition
1119480671, 978-1119480679
