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B A share is selling at $50 today. The interest rate is 8% per annum on a continuously compounded basis. The share is expected to
B A share is selling at $50 today. The interest rate is 8% per annum on a continuously compounded basis. The share is expected to pay a dividend of $0.75 at the end of 6 months. What is the price of a 10-month forward contract? Show your workings. (10 marks) The price of the share is $60, three months from today. What is the value of the contract three months from today? Show your workings. (15 marks) C Discuss the similarities and differences between futures contracts and forward contracts
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