Question
The spot price of a stock is at $400. The stock provides a $4 dividend in three months and another $4 dividend in six months.
The spot price of a stock is at $400. The stock provides a $4 dividend in three months and another $4 dividend in six months. The risk free financing rate for all maturities is 2% per annum (with continuous compounding). What is the fair price for a forward contract that matures in 8 months?
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Financial Fitness Forever 5 Steps To More Money Less Risk And More Peace Of Mind
Authors: Paul Merriman, Richard Buck
1st Edition
0071786988,0071786996
