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Consider a 6-month forward contract (delivers one unit of the security) on a security that is expected to pay a $1 dividend in three month.
Consider a 6-month forward contract (delivers one unit of the security) on a security that is expected to pay a $1 dividend in three month. The annual risk-free rate of interest is 5%. The security price is $20. What forward price should the contract stipulate, so that the current value of entering into the contract is zero?
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