Question
A short forward contract that was negotiated some time ago will expire in one year and has a delivery price of $50. The current stock
A short forward contract that was negotiated some time ago will expire in one year and has a delivery price of $50. The current stock price underlying this forward contract is $40. The risk-free rate with continuous compounding is 8% for all maturities. This stcok pays dividend payment of $3 each in 3 months and 6 months, respectively. What is the value of this forward contract?
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International Financial Management
Authors: Jeff Madura, Roland Fox
5th Edition
1473770505, 978-1473770508
