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Problem 1 Suppose XYZ stock costs $100/share today and is expected to pay $1.25/share quarterly dividend with the rst coming 3 months from today and

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Problem 1 Suppose XYZ stock costs $100/share today and is expected to pay $1.25/share quarterly dividend with the rst coming 3 months from today and the last just prior to the end of the year (from today). Price a one-year forward contract on the XYZ stock if you know that the annual continuously compounded risk-free rate is 10%. If this contract could be prepaid today how much should it cost

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