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The current price of a stock is 82. Suppose the stock pays monthly dividend for the next 2 years and the first payment will be

  1. The current price of a stock is 82. Suppose the stock pays monthly dividend for the next 2 years and the first payment will be made one month from now. The amount of the first dividend is 0.4, and each subsequent dividend will be 1% higher than the one in the previous month.

    If the continuously compounded risk-free interest rate is 3% per year. Calculate the price of a 2-year forward contract on the stock.

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