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The following information is available about the ABC, Inc stock: - The current price of a stock is 102 - The one-year forward price of
The following information is available about the ABC, Inc stock:
- The current price of a stock is 102
- The one-year forward price of the stock is 105.11
- The price of a one-year zero coupon bond is 955.04 and its face value is 1000
- The stock pays dividends of .
1a) What is the continuously compounded risk-free interest rate?
1b) What is ?
1c) If this stock does not pay dividends and the risk-free rate is 4%, determine its 18-month forward price.
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