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Assume money can be borrowed at 6 percent and invested at 5 percent per annum, both rates continuously compounded. To trade in stocks, a brokerage
Assume money can be borrowed at 6 percent and invested at 5 percent per annum, both rates continuously compounded. To trade in stocks, a brokerage commission of 0.50 percent of the stock price is charged today, but there are no brokerage charges on the maturity of the forward contract. A company's stock price is $55 today. Then the 1-year forward price should lie between: O a. $57.91 and $58.87 O b. $56.04 and $56.94 Oc. $57.16 and $58.32 O d. $56.24 and $57.14 O e. $57.53 and $58.69
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