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Today is May 1st. You have a position of 1000 shares in Microsoft which you plan to sell on July 1st. Microsoft pays an annual
Today is May 1st. You have a position of 1000 shares in Microsoft which you plan to sell on July 1st. Microsoft pays an annual dividend yield of 2.5% of the stock price. Suppose that today Microsoft trades at $252 per share and that the annual interest rate is 5% with continuous compounding. If you decide to use a forward contract to sell 1000 shares of Microsoft on July 1st, what forward price should you charge today? 252.53 252.87 251.48 253.58 253.05
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