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Consider the stock with a spot price ( S t ) of $ 1 0 0 . The stock pays dividend of $ 3 per
Consider the stock with a spot price of $ The stock pays dividend of $ per share each half year.
aCompute the fair forward price on this stock with one year maturity.
b Suppose you are long oneyear forward contracts one stock per contract on the stock with a delivery price of $ what is the value of your long forward position?
cSuppose a brokerdealer is willing to make market buysell at a oneyear forward price of $ What can you do to lock in a profit? yes there is an arbitrage. Just tell me what to do
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