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The current stock price is $200, and 1-year forward contract on the stock. We assume that the risk-free rate of interest (continuously compounded) is 10%

The current stock price is $200, and 1-year forward contract on the stock. We assume that the risk-free rate of interest (continuously compounded) is 10% per annum for all maturities.

Find the cost of forward.

a) The stock pays no dividend till maturity.

b) The stock pays dividends of $0.85 per share are expected after 3 months and 6 months.

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