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Consider a security that pays income to its holders (e.g., a dividend-paying stock, or a coupon bond). Should the forward price of this security (for
Consider a security that pays income to its holders (e.g., a dividend-paying stock, or a coupon bond). Should the forward price of this security (for a contract that matures at time T), F0,T, be higher than, lower than, or equal to the security's current spot price? Why?
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