Question
A stock is expected to pay a dividend of $3 per share in two months and in five months. The stock price is $140 and
A stock is expected to pay a dividend of $3 per share in two months and in five months. The stock price is $140 and the risk-free rate of interest is 5% per annum (cont. comp) for all maturities. What is the price of a six-month forward contract?
What is the initial value of the forward contract in the above problem?
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Fundamentals of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
12th edition
ISBN: 978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359
