Question
A stock will pay a dividend of $2 in 1 month and $2 in 4 months. The continuous risk-free rate for all maturities is 4.8%.
A stock will pay a dividend of $2 in 1 month and $2 in 4 months. The continuous risk-free rate for all maturities is 4.8%. The current price of the stock is $96. Calculate the arbitrage-free price of a six-month forward contract on the stock.
$ 92.04
102.39
99.96
$ 94.28
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
12th Edition
978-0030243998, 30243998, 324422695, 978-0324422696
