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Today is April 15 (denoted time 0). XYZ stock may or may not pay dividends before September 1. (No data on this.) Consider the
Today is April 15 (denoted "time 0"). XYZ stock may or may not pay dividends before September 1. (No data on this.) Consider the following forward contracts on XYZ stock, all expiring on September 1 (denoted "time T"). Assuming that all these contracts are "fairly priced," complete the missing numbers, and (algebraically) the right column, from the long party's perspective. It is given that B(0,T) = $0.9600 This is the price today, per $1 face value, of a T-bill (government zero-coupon bond) maturing on Sept. 1. Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Apr. 15 value (down payment) $7 0 Delivery price on Sept. 1 $66 0 *******.. $75 Thus the payoff for the long party is S(T) - 66 $2 In other words, Contract 1 is fully specified. Based on that, you need to complete the other contracts. There is no need to show work. Use two (or more) decimal places. ......... .....
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