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please no recycled answers! An investor has just taken a long position in a one-year forward contract on a dividend paying stock. The stock is
please no recycled answers!
An investor has just taken a long position in a one-year forward contract on a dividend paying stock. The stock is expected to pay a dividend of \\( \\$ 6 \\) per share in five months and in eleven months. The stock price is currently selling for \\( \\$ 100 \\) and the risk-free rate of interest is \7 per year with continuous compounding for all maturities. a. What are the forward price ( \\( \\left.F_{0}=\\left(S_{0}-1\ ight) e^{r T}\ ight) \\) and the initial value of the forward contract? The forward price is answer; \\( \\$ 75.50 \\) ) and the initial value is (sample answer: \\$75.50) position in the fonward contract? Now the forward price is (sample answer: \\( \\$ 75.50 \\) ) and the value of the forward position is (sample answer: \\( +\\$ 5.50 \\); or \\( -\\$ 5.50 \\) ) Step by Step Solution
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