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Stock ABC currently trades at a price of S0 = 100 and is scheduled to pay the following dividends: (i) At time 0.2, a cash
Stock ABC currently trades at a price of S0 = 100 and is scheduled to pay the following dividends:
(i) At time 0.2, a cash dividend of $8 per share will be paid.
(ii) From time 0.25 to time 0.75, dividends are paid continuously at a rate proportional to its price. The dividend yield is 6%.
(iii) At time 0.8, a cash dividend of $6 per share will be paid.
(iv) The continuously compounded risk-free interest rate is 5%.
Find the price of a one-year prepaid forward contract on stock ABC
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