Question
You anticipate the receipt of money in 190 days, which you will use to purchase stocks in a particular company. The stock is currently selling
You anticipate the receipt of money in 190 days, which you will use to purchase stocks in a particular company. The stock is currently selling for $75 and will pay a $.50 Dividend in 50 days and another in 140 days . The risk free rate is 3% and with continuous compounding for all maturities and you go long on the contract
A)At what price would you be willing to buy the stock in 190 days through a forward contract
B) suppose you agree at the price you found in the previous part, and 80 days later the stock has fallen to $68.31. What is the value of the forward contract?
C)What is the new forward price?
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