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Stock ABC is now 50/share. It pays no dividend. What is the 1-year fair forward price if the financing rate is 2%? Suppose ABC falls

  1. Stock ABC is now 50/share. It pays no dividend. What is the 1-year fair forward price if the financing rate is 2%?

  1. Suppose ABC falls 10%. What happens to the fair forward (assuming unchanged financing rate)?

  1. Stock XYZ is now 60/share. It pays a dividend (annual) of 1/share. What is the 1-year fair forward price if the financing rate is 2%?

  1. What is XYZs 3-month far forward? What happens to XYZs 1-yr fair forward if the company raises the dividend to 2/share?

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